A month has gone by since the last earnings report for Amdocs (DOX Quick QuoteDOX - Free Report) . Shares have added about 2.1% 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 Q3 Earnings Surpass Estimates, Revenues Miss

Amdocs reported third-quarter fiscal 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both top and bottom lines marked a year-over-year improvement.

The company reported third-quarter non-GAAP earnings of $1.62 per share, beating the consensus mark of $1.61. The non-GAAP earnings came at the higher end of management’s guidance of $1.57-$1.63. Quarterly earnings increased 3.2% from the year-ago quarter’s $1.57 per share.

Amdocs reported revenues of $1.25 billion, which missed the Zacks Consensus Estimate of $1.26 billion and came within management’s guidance of $1.235-$1.275 billion. Compared with the year-ago quarter, revenues were up 1.1% on a reported basis and 1.8% on a constant-currency basis.

Quarterly Details

Amdocs’ top-line performance was primarily driven by healthy growth in the Rest of the World, partially offset by a decline in Europe and North America.

North America reported revenues of $828.8 million (66.3% of total revenues), which declined 0.25% year over year. Europe’s revenues (14% of total revenues) of $175.9 million decreased 6.1% year over year. Rest of the World’s revenues (19.6% of total revenues) grew 12.6% year over year to $245.3 million. Our model estimates for North America, Europe and the Rest of the World were pegged at $840.3 million, $190.4 million and $224.6 million, up 1.1%, 1.7% and 3.1%, respectively, year over year.

Managed services revenues rose 3% year over year to $740.8 million. The company ended the third quarter of fiscal 2024 with a 12-month backlog of $4.25 billion, up $20 million sequentially and $110 million year over year. Our model estimates for managed services revenues and backlog were pegged at $727.7 million and $4.23 billion, respectively.

The non-GAAP operating income increased 5.5% year over year to $232.4 million, while the operating margin expanded 80 basis points to 18.6%. 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 $502.2 million as of June 30, 2024, compared with $544.4 million as of March 31, 2023.

In the third quarter of fiscal 2024, net cash provided by operating activities was $191.5 million, up from $132.7 million in the previous quarter and $172.6 million in the year-ago period. Free cash flow was $175 million compared with the previous quarter’s $113 million and the year-earlier quarter’s $143.6 million.

The company repurchased shares worth $443.3 million in the first nine months of fiscal 2024 and paid $157.3 million in dividends.

On May 8, the company’s board approved the next quarterly cash dividend of 47.9 cents. The increased quarterly cash dividend will be paid on Oct. 25 to shareholders of record as of Sep. 30, 2024.

FY24 Guidance

For fiscal 2024, the company revised the guidance for revenue growth from 1.6-3.6% to 1.9-2.7% on a reported basis. On a constant-currency basis, revenues are now projected to grow in the range of 2.3-3.1%.

For fiscal 2024, the company has revised the GAAP diluted earnings per share guidance from 7.0-13.0% to 7.4-9.2%. The non-GAAP earnings per share is estimated to grow in the band of 8.5-9.5%.

The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.4% on a year-over-year basis. The free cash flow is projected to be $700 million.

For the fourth quarter of fiscal 2024, the company projects revenues between $1.24 billion and $1.28 billion and adjusted earnings in the range of $1.67-$1.73 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Amdocs has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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. It's no surprise Amdocs has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Amdocs is part of the Zacks Computers - IT Services industry. Over the past month, Unisys (UIS Quick QuoteUIS - Free Report) , a stock from the same industry, has gained 43.3%. The company reported its results for the quarter ended June 2024 more than a month ago.

Unisys reported revenues of $478.2 million in the last reported quarter, representing a year-over-year change of +0.3%. EPS of $0.16 for the same period compares with -$0.09 a year ago.

Unisys is expected to post a loss of $0.04 per share for the current quarter, representing a year-over-year change of +87.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +73.3%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Unisys. Also, the stock has a VGM Score of A.