Why is Amdocs (DOX) up 2.4% since its last earnings report?

A month has passed since Amdocs (DOX) last reported earnings. Shares have risen about 2.4% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Amdocs headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to better understand the important catalysts.

Amdocs announces third quarter results

Amdocs reported third-quarter fiscal 2019 results where the top line was slightly off estimates, but the bottom line was the same.

Non-GAAP quarterly earnings were $1.19 per share, compared to $1.03 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $1.11. This amount exceeded the company’s target range of $1.08 to $1.14 per share.

Revenue for the reported quarter was $1.024 billion, missing the consensus estimate of $1.03 billion but improving 2.2% year over year. Revenue was also in the $1.005-$1.045 billion range.

A steady influx of new clients, strong project execution and strong managed services growth drove revenues. However, there was an unfavorable impact from currency changes of almost $3 million year-over-year.

Specifically, Amdocs announced the acquisition of TTS Wireless to strengthen its open cloud and 5G capabilities.

Quarter details

Regionally, North America revenue (62.2% of total revenue) was $634.2 million, up 1.6% from the prior-year quarter, driven by the digital modernization requirements of many Amdocs telecommunications customers. pay TV and media. Europe (14.8%) reported revenues of $151 million, up 1.6%. Rest of World (13%) generated revenue of $234.5 million, up 6.8%.

The North America region experienced sequential revenue growth, driven by stable activity trends at AT&T and good activity levels from many customers in the border region.

The strong growth of Amdocs’ managed services business was driven by continued growth in managed transformation activities for clients such as PLDT and Infineon. It combines the implementation of large-scale data transformation projects with the operational benefits of a managed services model.

Additionally, strength was seen at Amdocs Media, where the company continued to integrate media assets to meet the rapidly evolving content monetization needs of traditional service providers and media studios. As a result, Amdocs has signed a managed services agreement to distribute 3D video-on-demand services under the new logo.

During the quarter, Amdocs partnered with T-Mobile and Sprint, assuming planned proceeds from the merger.

Operational indicators

The company incurred non-GAAP operating expenses of $847.4 million, an increase of 2.3% compared to the same quarter last year.

Non-GAAP operating income increased 2.1% to $177.3 million.

Balance sheet and cash flow

In the third fiscal quarter, the company repurchased shares worth $89 million. Additionally, the company’s board of directors recently approved a quarterly dividend of $0.285 per share. The dividend will be paid on October 25, 2019.

Perspectives

For the fourth quarter of fiscal 2019, Amdocs expects revenue in the range of $1.015 billion to $1.055 billion, assuming a positive impact from currency fluctuations of approximately $2 million and a partial quarterly contribution from TTS Wireless buyout revenues.

For the fiscal fourth quarter, non-GAAP earnings per share are expected to be in the range of $1.04 to $1.10. Amdocs’ non-GAAP earnings are not expected to be impacted by the TTS Wireless acquisition this quarter.

The company has raised its revenue forecasts for fiscal year 2019 based on the reports. It now expects revenue growth of 2.4-3.4% year-over-year compared to previously expected growth of 1.8-3.8%.

Amdocs also revised its revenue guidance on a constant currency basis. It expects revenue growth in the range of 3.6% to 4.6% compared to the previously forecasted 3-5%. This guidance takes into account a 1.2% year-on-year negative impact from currency fluctuations.

The company now expects non-GAAP earnings per share growth of 6.2% to 7.8% year over year, compared to its previously expected growth range of 4.5% to 8.5%.

Favorable market dynamics are driving good customer activity in North America. This will likely partially offset AT&T’s declining revenues, which will likely provide moderate revenue growth in North America throughout fiscal year 2019.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

Currently, Amdocs has a solid Growth Score of B, although it lags slightly behind its Momentum Score of C. Plotting a somewhat similar path, the stock was given a B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Amdocs has a Zacks Rank of #2 (Buy). We expect an above-average rate of return on shares in the coming months.

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