Shares of ANSYS Inc. (ANSS - Free Report) have been performing well of late. If you haven't taken advantage of the share price appreciation yet, its time you hold the stock in your portfolio as it looks promising and is poised to carry the momentum ahead.
ANSYS' shares have returned 39.5% in the past year, outperforming the industry's growth of 38.9%.
What's Going in ANSYS’s Favor?
Q2 Results, Upbeat Guidance
The company delivered strong results for second-quarter 2018, wherein both the top and bottom lines fared better than the respective Zacks Consensus Estimate and came ahead of management’s guided range.
Non-GAAP earnings came in at $1.35 per share (per ASC 606), better than management’s guidance of 94 cents to $1.09 per share. The Zacks Consensus Estimate was pegged at $1.05.
Non-GAAP revenues increased 13% (10% in constant currency) from the year-ago quarter to $308.9 million. The top line also exceeded the high end of management’s guided range of $$272-$292 million. The Zacks Consensus Estimate was pegged at $290 million.
Year-over-year revenue growth was driven by increase of 7.5% in software license revenues and growth of 16.5% in maintenance and service revenues.
The company also provided an encouraging guidance. For third-quarter 2018, ANSYS anticipates non-GAAP earnings in the range of 93 cents to $1.07 per share. The Zacks Consensus Estimate is pegged at $1.04 cents.
For 2018, ANSYS updated outlook. The company now anticipates non-GAAP revenues of $1.210-$1.250 better than the earlier band of $1.197-$1.262 billion. Non-GAAP earnings are now envisioned in the range of $4.87-$5.14 per share better than the previously guided range of $4.60-$5.08.
The Zacks Consensus Estimate for revenues and earnings are pegged at $1.20 billion and $5.05 per share, respectively.
Increasing demand for simulation particularly from industries like energy bodes well for ANSYS. The company’s collaborations with companies like NVIDIA, Ferrari, Taiwan Semiconductor, Synopsys and Grundfos have helped it to develop a varied range of products ranging from automotive reliability solutions, live simulation software to high performance steering wheels.
ANSYS acquired France-based OPTIS. With the buyout, OPTIS’ feature-rich virtual reality (VR) platform will complement ANSYS offerings to help automotive manufacturers supply safer driverless vehicles. Safer navigation will be ensured by development of futuristic camera, lidar and radar.
The buyout of 3DSIM, a leading additive manufacturing simulation technology provider, will help ANSYS to foray into 3D metal printing and access the industry's only complete additive manufacturing simulation workflow.
Acquisitions like 3DSIM and OPTIS are not only enabling ANSYS to bring innovative solutions to the market but are also aiding it in enhancing presence in the competitive simulations market.
However, its margin is expected to remain under pressure as ANSYS continues to invest on product development.
ANSYS outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 13.2%.
We expect the trend to continue and drive the overall financial performance of this Zacks Rank #3 (Hold) stock.
Better-ranked stocks from the broader technology sector are Cypress Semiconductor Corporation (CY - Free Report) , Paycom Software, Inc. (PAYC - Free Report) and NetApp, Inc. (NTAP - Free Report) , all carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cypress, Paycom Software and NetApp have a long-term earnings growth rate of 16.1%, 24.8% and 14.1%, respectively.
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