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ANSYS (ANSS) to Report Q3 Earnings: What's in the Cards?

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ANSYS (ANSS - Free Report) is set to report third-quarter 2018 results on Nov 7.

The company beat the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive surprise of 13.2%.

In the last reported quarter, the company's earnings of $1.35 per share (per ASC 606) surpassed the Zacks Consensus Estimate of $1.05 per share.

Non-GAAP revenues increased 13% from the year-ago quarter to $308.9 million. GAAP revenues came in at $305.6 million, up 11% year over year. The Zacks Consensus Estimate was pegged at $290 million.

For the third quarter, ANSYS expects non-GAAP revenues to be between $265 million and $285 million and non-GAAP earnings between 93 cents and $1.05 per share.  

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.04 per share, indicating year-over-year decline of 1%. Further, the consensus mark for revenues is pegged at $283.7 million, up 3% from the year-ago quarter.

Let’s see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Q3 Results

The company’s Startup Program is benefiting more than 500 young companies globally by providing them with ANSYS solutions to build next generation product and services, which is a positive.

ANSYS’, which is focused on chip development for artificial intelligence, success with RedHawk-SC is evident from its robust adoption by hardware startups. Further, the company’s RedHawk customers have started deploying the same in their complex products and design. This is expected to benefit the company in the to-be-reported quarter.

ANSYS acquired France-based OPTIS and the latter’s feature-rich virtual reality (VR) platform is expected to complement ANSYS’ offerings to help automotive manufacturers supply safer driverless vehicles. Safer navigation is ensured by development of futuristic camera, lidar and radar.

With this acquisition, ANSYS is set to introduce ANSYS VRXPERIENCE, which will simulate the vehicle’s reaction to critical situation. This is expected to boost customer experience.

The company also launched ANSYS Twin Builder, which helps engineers to deploy digital representations of physical products. The Twin Builder helped the company in signing a deal with software giant SAP, which will be introduced in SAP Predictive Engineering Insights.

This relationship is expected to bode well for ANSYS, given SAP's enterprise product portfolio and extensive customer reach.

In the third quarter, the company launched ANSYS 19.2, which enables customers to solve their product development challenges. The new release accelerates computational fluid dynamics (CFD) models faster to boost productivity.

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. This will enhance ANSYS’s presence in the competitive simulations market.

Notably, the backlog for the company in the last reported quarter increased 24% year over year to $816 million, which is a positive.

However, margin is expected to remain under pressure as ANSYS continues to invest on product development.

ANSYS, Inc. Price and EPS Surprise

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

ANSYS has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks with a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post earnings beat in their upcoming releases:

The Trade Desk Inc. (TTD - Free Report) has an Earnings ESP of +0.29 and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NetApp, Inc. (NTAP - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank #1.

CenturyLink, Inc. (CTL - Free Report) has an Earnings ESP of +10.29% and a Zacks Rank #2.

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