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NIC Inc (EGOV) Raised to Strong Buy on Increased Estimates
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Zacks Investment Research upgraded NIC Inc. to a Zacks Rank #1 (Strong Buy) on Dec 31, 2016. Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of outperforming the broader market over the next few quarters.
Why the Upgrade?
The company is leading a provider of Internet-based, electronic government services that help governments use the Internet to reduce costs and provide a higher level of service to businesses and citizens.
The upgrade was primarily driven by positive estimate revisions over the last 60 days. Notably, the Zacks Consensus Estimate was raised by 10% to 77 cents for the current year, with three estimates moving higher over the past two months. However, the estimate mark for full-year 2017 remained at 75 cents over the same time period.
Meanwhile, coming to the current share price trend, NIC rallied almost 1.70% in the past three months. In the past one year, shares of NIC generated a return of 1.70% compared with the Zacks Internet Software industry’s loss of 13.06%.
Also, the company has a nice streak of earnings beat, especially when looking at the previous two releases. In fact, EGOV surpassed estimates by at least 10% in both cases, pointing to a nice short-term history of crushing expectations.
In the most recent third quarter, the company looked to deliver earnings of 18 cents per share, when it actually earned 24 cents, representing a 33.3% positive surprise.
Also, NIC's board of directors approved a special cash dividend of 65 cents per share or approximately $44 million in the third quarter. The company’s financial strength, validated by its strong cash position and liquidity, allows it to continue with its special dividend program.
Moreover, the stock looks attractive from a valuation perspective. This is because NIC currently trades at a forward P/E of 31.5x, significantly lower than the industry average of 35.7x, which signifies a huge upward potential.
Furthermore, we believe that the company’s launch of new digital government solutions, efforts to enhance its existing online services so as to deliver efficiencies and deal wins will boost results ahead.
Stamps.com delivered a positive earnings surprise of 66.72% in the trailing four quarters.
Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.
Ctrip.com International Ltd. delivered a positive earnings surprise of 50.32% in the trailing four quarters.
Zacks' Top 10 Stocks for 2017
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Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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NIC Inc (EGOV) Raised to Strong Buy on Increased Estimates
Zacks Investment Research upgraded NIC Inc. to a Zacks Rank #1 (Strong Buy) on Dec 31, 2016. Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of outperforming the broader market over the next few quarters.
Why the Upgrade?
The company is leading a provider of Internet-based, electronic government services that help governments use the Internet to reduce costs and provide a higher level of service to businesses and citizens.
The upgrade was primarily driven by positive estimate revisions over the last 60 days. Notably, the Zacks Consensus Estimate was raised by 10% to 77 cents for the current year, with three estimates moving higher over the past two months. However, the estimate mark for full-year 2017 remained at 75 cents over the same time period.
Meanwhile, coming to the current share price trend, NIC rallied almost 1.70% in the past three months. In the past one year, shares of NIC generated a return of 1.70% compared with the Zacks Internet Software industry’s loss of 13.06%.
Also, the company has a nice streak of earnings beat, especially when looking at the previous two releases. In fact, EGOV surpassed estimates by at least 10% in both cases, pointing to a nice short-term history of crushing expectations.
In the most recent third quarter, the company looked to deliver earnings of 18 cents per share, when it actually earned 24 cents, representing a 33.3% positive surprise.
Also, NIC's board of directors approved a special cash dividend of 65 cents per share or approximately $44 million in the third quarter. The company’s financial strength, validated by its strong cash position and liquidity, allows it to continue with its special dividend program.
Moreover, the stock looks attractive from a valuation perspective. This is because NIC currently trades at a forward P/E of 31.5x, significantly lower than the industry average of 35.7x, which signifies a huge upward potential.
Furthermore, we believe that the company’s launch of new digital government solutions, efforts to enhance its existing online services so as to deliver efficiencies and deal wins will boost results ahead.
NIC INC Price, Consensus and EPS Surprise
NIC INC Price, Consensus and EPS Surprise | NIC INC Quote
Key Picks
Some other stocks in the industry worth considering include Stamps.com Inc. and Cognex Corporation (CGNX - Free Report) carrying a Zacks Rank #1 and Ctrip.com International witha Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stamps.com delivered a positive earnings surprise of 66.72% in the trailing four quarters.
Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.
Ctrip.com International Ltd. delivered a positive earnings surprise of 50.32% in the trailing four quarters.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>