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Amdocs (DOX) Up 1.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? 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 get a better handle on the important catalysts.
Amdocs Earnings and Revenues Beat Estimates in Q2
Amdocs Limited reported second-quarter fiscal 2022 non-GAAP earnings of $1.54 per share, which improved 36.3% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $1.24. The bottom line was significantly higher than the guided range of $1.22-$1.28.
Record revenues of $1.15 billion beat the consensus mark of $1.12 billion and came in line with the upper end of the guided range of $1.11-$1.15 billion. Compared with the year-ago quarter, revenues were up 9.2% on a reported basis and 10.1% on a constant currency basis.
Amdocs’ top-line performance was primarily driven by North America’s high activity levels among top consumers. However, foreign currency movements subdued the figure.
Quarterly Details
North America reported record revenues of $772 million (67.4% of total revenues), indicating a 13.7% year-over-year surge.
Europe revenues (12.9% of total revenues) of $147.2 million decreased 1.1%, year over year. Rest of the World revenues (19.7% of total revenues) grew 2.3% year over year to $225.9 million.
Managed services revenues jumped 4.5% year over year to $663.4 million.
The company ended fiscal second-quarter 2022 with a 12-month backlog of $3.89 billion, up $0.06 billion sequentially and 9.9% year on year.
Non-GAAP research & development expenses, as a percentage of revenues, expanded 40 basis points (bps) on a year-over-year basis to 7.5%.
Non-GAAP selling, general & administrative expenses, as a percentage of revenues, increased 60 bps year over year to 11.1%.
Non-GAAP operating margin expanded 10 bps sequentially to 17.6%.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $856.4 million as of Mar 31, 2022, compared with $868.8 million as of Dec 31, 2021.
During second-quarter fiscal 2022, net cash provided by operating activities was $168.9 million, down from $204 million in the previous quarter and up from $119.7 million in the year-ago period. Free cash flow was $121.6 million compared with the previous quarter’s $146.9 million and the year-earlier quarter’s $70.5 million during the same time frame.
During the first six months of fiscal 2022, net cash provided by operating activities was $373 million, while free cash flow was $268.5 million.
During the fiscal second quarter, the company repurchased shares worth $130 million. Amdocs’ board approved the new increased quarterly cash dividend rate of 39.5 cents per share. The dividends will be paid out on Jul 29, 2022, to the shareholders of record as of Jun 30.
Guidance Update
For fiscal 2022, Amdocs now anticipates revenue growth of 5.2-7.2% on a reported basis, compared with the previous forecast of 3.4-7.4%. On a constant currency basis, revenues are projected to increase in the band of 8-10% year over year, compared with the earlier projection of 6-10%.
The updated fiscal 2022 outlook reflects an expected unfavorable foreign-currency impact of approximately 0.8% on a year-over-year basis compared with the previous forecast of 0.6%.
Adjusted earnings are estimated to grow between 7.3% and 10.3% compared with the prior projection of 6.3% and 10.3%.
For the third quarter of fiscal 2022, the company projects revenues between $1,140 million and $1,180 million and adjusted earnings in the range of $1.23-$1.29 per share. The outlook reflects an expected unfavorable foreign-currency impact of approximately $1 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.6% due to these changes.
VGM Scores
At this time, Amdocs has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Amdocs has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Amdocs is part of the Zacks Computers - IT Services industry. Over the past month, ServiceNow (NOW - Free Report) , a stock from the same industry, has gained 13.7%. The company reported its results for the quarter ended March 2022 more than a month ago.
ServiceNow reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of +26.6%. EPS of $1.73 for the same period compares with $1.52 a year ago.
For the current quarter, ServiceNow is expected to post earnings of $1.54 per share, indicating a change of +8.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -28.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for ServiceNow. Also, the stock has a VGM Score of D.
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Amdocs (DOX) Up 1.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Amdocs (DOX - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amdocs due for a pullback? 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 get a better handle on the important catalysts.
Amdocs Earnings and Revenues Beat Estimates in Q2
Amdocs Limited reported second-quarter fiscal 2022 non-GAAP earnings of $1.54 per share, which improved 36.3% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $1.24. The bottom line was significantly higher than the guided range of $1.22-$1.28.
Record revenues of $1.15 billion beat the consensus mark of $1.12 billion and came in line with the upper end of the guided range of $1.11-$1.15 billion. Compared with the year-ago quarter, revenues were up 9.2% on a reported basis and 10.1% on a constant currency basis.
Amdocs’ top-line performance was primarily driven by North America’s high activity levels among top consumers. However, foreign currency movements subdued the figure.
Quarterly Details
North America reported record revenues of $772 million (67.4% of total revenues), indicating a 13.7% year-over-year surge.
Europe revenues (12.9% of total revenues) of $147.2 million decreased 1.1%, year over year. Rest of the World revenues (19.7% of total revenues) grew 2.3% year over year to $225.9 million.
Managed services revenues jumped 4.5% year over year to $663.4 million.
The company ended fiscal second-quarter 2022 with a 12-month backlog of $3.89 billion, up $0.06 billion sequentially and 9.9% year on year.
Non-GAAP research & development expenses, as a percentage of revenues, expanded 40 basis points (bps) on a year-over-year basis to 7.5%.
Non-GAAP selling, general & administrative expenses, as a percentage of revenues, increased 60 bps year over year to 11.1%.
Non-GAAP operating margin expanded 10 bps sequentially to 17.6%.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $856.4 million as of Mar 31, 2022, compared with $868.8 million as of Dec 31, 2021.
During second-quarter fiscal 2022, net cash provided by operating activities was $168.9 million, down from $204 million in the previous quarter and up from $119.7 million in the year-ago period. Free cash flow was $121.6 million compared with the previous quarter’s $146.9 million and the year-earlier quarter’s $70.5 million during the same time frame.
During the first six months of fiscal 2022, net cash provided by operating activities was $373 million, while free cash flow was $268.5 million.
During the fiscal second quarter, the company repurchased shares worth $130 million. Amdocs’ board approved the new increased quarterly cash dividend rate of 39.5 cents per share. The dividends will be paid out on Jul 29, 2022, to the shareholders of record as of Jun 30.
Guidance Update
For fiscal 2022, Amdocs now anticipates revenue growth of 5.2-7.2% on a reported basis, compared with the previous forecast of 3.4-7.4%. On a constant currency basis, revenues are projected to increase in the band of 8-10% year over year, compared with the earlier projection of 6-10%.
The updated fiscal 2022 outlook reflects an expected unfavorable foreign-currency impact of approximately 0.8% on a year-over-year basis compared with the previous forecast of 0.6%.
Adjusted earnings are estimated to grow between 7.3% and 10.3% compared with the prior projection of 6.3% and 10.3%.
For the third quarter of fiscal 2022, the company projects revenues between $1,140 million and $1,180 million and adjusted earnings in the range of $1.23-$1.29 per share. The outlook reflects an expected unfavorable foreign-currency impact of approximately $1 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.6% due to these changes.
VGM Scores
At this time, Amdocs has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Amdocs has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Amdocs is part of the Zacks Computers - IT Services industry. Over the past month, ServiceNow (NOW - Free Report) , a stock from the same industry, has gained 13.7%. The company reported its results for the quarter ended March 2022 more than a month ago.
ServiceNow reported revenues of $1.72 billion in the last reported quarter, representing a year-over-year change of +26.6%. EPS of $1.73 for the same period compares with $1.52 a year ago.
For the current quarter, ServiceNow is expected to post earnings of $1.54 per share, indicating a change of +8.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -28.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for ServiceNow. Also, the stock has a VGM Score of D.