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Teradata (TDC) Down 2.6% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Teradata Corporation (TDC - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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.

Teradata Q1 Earnings Beat Estimates, Revenues Miss

Teradata reported first-quarter 2017 results, wherein adjusted earnings per share of $0.20 topped the Zacks Consensus Estimate of $0.19. However, it declined 46% on a year-over-year basis.

The company reported non-GAAP earnings of $0.28 in the quarter, compared with $0.47 in the year-ago quarter.

Revenue Details

Total revenue of $491 million missed the Zacks Consensus Estimate of $498.4 million. Moreover, it plunged 9.9% on a year-over-year basis. This was mainly due to the company’s ongoing business transformation activity, under which its large customers have begun shifting to subscription pricing offerings.

Products and Cloud revenues decreased 20% year over year to $166 million. Services revenues fell 4% on a year-over-year basis to $325 million. Revenues from Americas Data and Analytics decreased 9% year over year while that from International Data and Analytics grew 4% from the prior-year quarter.

Margin

Non-GAAP gross margin contracted 310 basis points (bps) from the year-ago quarter to 51.1% mainly due to lower volume.

The company reported non-GAAP operating income of $58 million, down from $92 million reported in the prior-year quarter. Non-GAAP operating margin shrunk to 11.8% from 18% reported year over year.

Balance Sheet

Teradata exited the quarter with $1.164 billion in cash and cash equivalents, compared with $917 million at the end of the previous-year quarter. Teradata had long-term debt of $523 million at the end of the first quarter compared with $560 million at the end of first-quarter 2016.

In the first quarter, Teradata generated cash flow from operations of $248 million, compared with $250 million in the first quarter of 2016. Free cash flow generated was $230 million, compared with $224 million in the year-ago quarter.

Guidance

Total revenue for the second quarter of 2017 is expected to be approximately $510–$530 million. Non-GAAP earnings per share are expected in the range of $0.25–$0.30.

The Zacks Consensus Estimate for revenues and earnings per share for the current quarter is pegged at $531.13 million and $0.30, respectively.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Teradata Corporation Price and Consensus

 

VGM Scores

At this time, the stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an '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 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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