Yahoo Finance Amdocs (DOX) Down 6.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Amdocs (DOX). Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amdocs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Amdocs Q2 Earnings Miss Estimates, Revenues Match
Amdocs reported second-quarter fiscal 2024 results, wherein earnings missed the Zacks Consensus Estimate and revenues matched the same. However, both the top and bottom lines marked a year-over-year improvement.
The company reported second-quarter non-GAAP earnings of $1.56 per share, missing the consensus mark of $1.58. The non-GAAP earnings per share matched the midpoint of management’s guidance of $1.53-$1.59. Quarterly earnings increased 6.1% from the year-ago quarter’s $1.47 per share.
Amdocs reported revenues of $1.25 billion, which came in line with the Zacks Consensus Estimate, as well as matched the midpoint of management’s guidance of $1.23-$1.27 billion. Compared with the year-ago quarter, revenues were up 1.8% on a reported basis and 2% on a constant-currency basis.
Quarterly Details
Amdocs’ top-line performance was primarily driven by healthy growth in Europe and Rest of the World, offset by a decline in North America.
North America reported revenues of $823.2 million (66% of total revenues), which declined 0.7% year over year. Europe revenues (14.8% of total revenues) of $184.8 million increased 7.6% year over year. Rest of the World revenues (19% of total revenues) grew 6.8% year over year to $237.8 million. Our model estimates for North America, Europe and Rest of the World were pegged at $843.4 million, $181.2 million and $227.4 million, up 1.7%, 5.5% and 2.2%, respectively, year over year.
Managed services revenues rose 0.2% year over year to $720.3 million. The company ended the second quarter of fiscal 2024 with a 12-month backlog of $4.23 billion, up $20 million sequentially and $120 million year over year. Our model estimates for managed services revenues and backlog were pegged at $728.7 million and $4.20 billion, respectively.
The non-GAAP operating income increased 5.4% year over year to $229 million, while the operating margin expanded 60 basis points to 18.4%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s continuous focus on improving operational excellence and the adoption of automation and artificial intelligence.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $544.4 million as of Mar 31, 2024 compared with $601 million as of Dec 31, 2023.
In the second quarter of fiscal 2024, net cash provided by operating activities was $132.7 million, down from $182.4 million in the previous quarter and $294.5 million in the year-ago period. Free cash flow was $113 million compared with the previous quarter’s $138.6 million and the year-earlier quarter’s $259.4 million.
The company repurchased shares worth $115 million in the second quarter of fiscal 2024.
Amdocs paid out $101 million in dividends and repurchased stocks worth $274 million during the second quarter of fiscal 2024. On May 8, the company’s board approved the next quarterly cash dividend of 47.9 cents. The increased quarterly cash dividend will be first paid on Jul 26 to shareholders of record as of Jun 28, 2024.
FY24 Guidance
For fiscal 2024, the company revised the revenue growth guidance from 1.1-5.1% to 1.6-3.6% on a reported basis. On a constant-currency basis, revenues are now projected to increase in the range of 1.7-3.7%.
For fiscal 2024, the company has lowered the GAAP diluted earnings per share guidance from 13-19.5% to 7.0-13.0%. The non-GAAP earnings per share is estimated to grow in the band of 7.0 -11.0 %.
The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.1% on a year-over-year basis. For fiscal 2024, the non-GAAP operating margin is expected in a range of 18.1-18.7%, the non-GAAP effective tax rate is anticipated in the band of 13-17% and free cash flow is projected at $700 million.
For the third quarter of fiscal 2024, the company projects revenues between $1.235 billion and $1.275 billion and adjusted earnings in the range of $1.57-$1.63 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.48% due to these changes.
VGM Scores
Currently, Amdocs has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, 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 A. 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 these revisions indicates a downward shift. It's no surprise Amdocs has a Zacks Rank #4 (Sell). We expect a below 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, Roper Technologies (ROP), a stock from the same industry, has gained 5.2%. The company reported its results for the quarter ended March 2024 more than a month ago.
Roper Technologies reported revenues of $1.68 billion in the last reported quarter, representing a year-over-year change of +14.4%. EPS of $4.41 for the same period compares with $3.90 a year ago.
Roper Technologies is expected to post earnings of $4.44 per share for the current quarter, representing a year-over-year change of +7.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.
Roper Technologies has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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