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Why Is Amdocs (DOX) Up 0.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Amdocs Q1 Earnings Miss Estimates, Revenues Match
Amdocs reported first-quarter fiscal 2024 results, wherein earnings missed the Zacks Consensus Estimate while revenues matched the same. However, both the top and bottom lines marked a year-over-year improvement.
The company reported first-quarter non-GAAP earnings of $1.56 per share, missing the consensus mark by a penny. The non-GAAP earnings per share matched the midpoint of management’s guidance of $1.53-$1.59. Quarterly earnings also increased 7.6% from the year-ago quarter’s $1.45 per share.
Amdocs reported revenues of $1.25 billion, which came in line with the Zacks Consensus Estimate as well as matched the midpoint of management’s guidance range of $1.23-$1.27 billion. Compared with the year-ago quarter, revenues were up 5% on a reported basis and 4.8% on a constant-currency basis.
Quarterly Details
Amdocs’ top-line performance was primarily driven by continued strength in North America and healthy activity levels among top consumers in Europe.
North America reported record revenues of $838.1 million (67.3% of the total revenues), highlighting a 3% year-over-year increase. Europe revenues (14.6% of the total revenues) of $181.4 million increased 8% year over year. Rest of the World revenues (18.1% of the total revenues) grew 10% year over year to $225.7 million. Our model estimates for North America, Europe and Rest of the World were pegged at $842.5 million, $179.1 million and $223.4 million, suggesting growth of 3.7%, 6.2% and 9.3%, respectively.
Managed services revenues grew 3.2% year over year to $722.5 million. The company ended the first quarter of fiscal 2024 with a 12-month backlog of $4.21 billion, up $60 million sequentially and $120 million year over year. Our model estimates for managed services revenues and backlog were pegged at $727.7 million and $4.20 billion, respectively.
The non-GAAP operating income increased 7.5% year over year to $225 million, while the operating margin expanded 40 basis points to 18.1%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s continuous focus on improving operational excellence and the adoption of automation and artificial intelligence.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $601 million as of Dec 31, 2023, compared with $742.5 million as of Sep 30, 2023.
In the first quarter of fiscal 2024, net cash provided by operating activities was $182.4 million, down from $272.4 million in the previous quarter and up from $83.2 million in the year-ago period. Free cash flow was $138.6 million compared with the previous quarter’s $245.8 million and the year-earlier quarter’s $49.5 million.
The company repurchased shares worth $159 million in the first quarter of fiscal 2024.
Amdocs paid out $51 million in dividends and repurchased stocks worth $158.5 million during the first quarter of fiscal 2024. The company’s board has approved the next quarterly cash dividends at the rate of 47.9 cents in its February 2024 annual general meeting. The increased quarterly cash dividend will be first paid on Apr 26, 2024, to shareholders of record as of Mar 29, 2024.
Guidance
For fiscal 2024, the company raised the revenue growth guidance from 1-5% to 1.1-5.1% on a reported basis. On a constant-currency basis, revenues are projected to increase in the range of 1.2-5.2% year over year.
For fiscal 2024, the company has raised the GAAP diluted earnings per share guidance from 11-18% to 13-19.5%. The non-GAAP earnings per share is estimated to grow in the band of 8-12%.
The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.1% on a year-over-year basis. For fiscal 2024, the non-GAAP operating margin is expected in a range of 18.1-18.7%, the non-GAAP effective tax rate is anticipated in the band of 13-17% and free cash flow is projected at $750 million.
For the second quarter of fiscal 2024, the company projects revenues between $1.225 billion and $1.265 billion and adjusted earnings in the range of $1.53-$1.59 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Amdocs has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amdocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Amdocs (DOX) Up 0.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Amdocs Q1 Earnings Miss Estimates, Revenues Match
Amdocs reported first-quarter fiscal 2024 results, wherein earnings missed the Zacks Consensus Estimate while revenues matched the same. However, both the top and bottom lines marked a year-over-year improvement.
The company reported first-quarter non-GAAP earnings of $1.56 per share, missing the consensus mark by a penny. The non-GAAP earnings per share matched the midpoint of management’s guidance of $1.53-$1.59. Quarterly earnings also increased 7.6% from the year-ago quarter’s $1.45 per share.
Amdocs reported revenues of $1.25 billion, which came in line with the Zacks Consensus Estimate as well as matched the midpoint of management’s guidance range of $1.23-$1.27 billion. Compared with the year-ago quarter, revenues were up 5% on a reported basis and 4.8% on a constant-currency basis.
Quarterly Details
Amdocs’ top-line performance was primarily driven by continued strength in North America and healthy activity levels among top consumers in Europe.
North America reported record revenues of $838.1 million (67.3% of the total revenues), highlighting a 3% year-over-year increase. Europe revenues (14.6% of the total revenues) of $181.4 million increased 8% year over year. Rest of the World revenues (18.1% of the total revenues) grew 10% year over year to $225.7 million. Our model estimates for North America, Europe and Rest of the World were pegged at $842.5 million, $179.1 million and $223.4 million, suggesting growth of 3.7%, 6.2% and 9.3%, respectively.
Managed services revenues grew 3.2% year over year to $722.5 million. The company ended the first quarter of fiscal 2024 with a 12-month backlog of $4.21 billion, up $60 million sequentially and $120 million year over year. Our model estimates for managed services revenues and backlog were pegged at $727.7 million and $4.20 billion, respectively.
The non-GAAP operating income increased 7.5% year over year to $225 million, while the operating margin expanded 40 basis points to 18.1%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s continuous focus on improving operational excellence and the adoption of automation and artificial intelligence.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $601 million as of Dec 31, 2023, compared with $742.5 million as of Sep 30, 2023.
In the first quarter of fiscal 2024, net cash provided by operating activities was $182.4 million, down from $272.4 million in the previous quarter and up from $83.2 million in the year-ago period. Free cash flow was $138.6 million compared with the previous quarter’s $245.8 million and the year-earlier quarter’s $49.5 million.
The company repurchased shares worth $159 million in the first quarter of fiscal 2024.
Amdocs paid out $51 million in dividends and repurchased stocks worth $158.5 million during the first quarter of fiscal 2024. The company’s board has approved the next quarterly cash dividends at the rate of 47.9 cents in its February 2024 annual general meeting. The increased quarterly cash dividend will be first paid on Apr 26, 2024, to shareholders of record as of Mar 29, 2024.
Guidance
For fiscal 2024, the company raised the revenue growth guidance from 1-5% to 1.1-5.1% on a reported basis. On a constant-currency basis, revenues are projected to increase in the range of 1.2-5.2% year over year.
For fiscal 2024, the company has raised the GAAP diluted earnings per share guidance from 11-18% to 13-19.5%. The non-GAAP earnings per share is estimated to grow in the band of 8-12%.
The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.1% on a year-over-year basis. For fiscal 2024, the non-GAAP operating margin is expected in a range of 18.1-18.7%, the non-GAAP effective tax rate is anticipated in the band of 13-17% and free cash flow is projected at $750 million.
For the second quarter of fiscal 2024, the company projects revenues between $1.225 billion and $1.265 billion and adjusted earnings in the range of $1.53-$1.59 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Amdocs has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amdocs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.