Nuance Communications (NUAN) Earnings Preview: Q4 Report Expected Monday

in EARNINGS/INVESTING IDEAS by

Nuance Communications, Inc. (NASDAQGS:NUAN) is scheduled to report Q4 earnings results on November 20, 2019. The company is expected to report earnings of $0.28/share on revenue of $484.5 million. The consensus earnings per share (EPS) of $0.28/share is based on a poll of 5 analysts and represents a decline of -26.3% over the same quarter last year when the company reported earnings of $0.38/share.

The revenue forecast of $484.5 million based on a poll of 4 analysts implies a year-over-year (YoY) decline of -9.6%. Last year the company reported $536.2 million in revenue for the quarter.

Expected to report EPS decline of -$0.10/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $484.50 $536.21 -9.6%
EPS $0.28 $0.38 -26.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 1 quarter.

What are your expectations from Nuance Communications for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.27 $0.29 7.4% Beat
Q2, 2019 $0.26 $0.20 -21.6% Missed
Q1, 2019 $0.28 $0.33 17.9% Beat
Q4, 2018 $0.33 $0.38 16.9% Beat
Q3, 2018 $0.27 $0.27 0.0% Meet
Q2, 2018 $0.28 $0.27 -3.6% Missed
Q1, 2018 $0.26 $0.27 3.8% Beat
Q4, 2017 $0.14 $0.20 42.9% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Nuance Communications’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 7.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-07 $15.49 $16.60 7.2% Increase
2019-05-08 $16.78 $18.13 8.0% Increase
2019-02-07 $16.37 $16.77 2.4% Increase
2018-11-19 $16.89 $15.87 -6.0% Decline

Fundamentals And Technical Analysis

Nuance Communications is currently trading at $16.63/share, up 0.7% for the day. The company is trading at its 52-week high and company’s stock price is flat since the last earnings report. The company’s 14 Day Relative Price Index (RSI) of 67.55 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of -356.1x and a forward P/E multiple of 13.9x. Nuance Communications’s current share price also implies a price-to-book (P/B) multiple of 2.3x. The following table summarizes some other key fundamental ratios:

Data as of November 20, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 30, 2019
Stock Price (Current) $16.63
P/E Ratio -356.1x
P/E Ratio (Fwd) 13.9x
PEG Ratio -0.8
Total Debt to Capital (%) 28.8%
Levered Free Cash Flow $404.5 million
Enterprise Value / EBITDA 13.9x

Company Profile: Nuance Communications, Inc.

Nuance Communications, Inc. is a mid-cap stock with a market capitalization of $4.719 billion and a total enterprise value of $5.969 billion. The company operates in the Information Technology sector and Software industry.

Nuance Communications, Inc. provides voice recognition and natural language understanding solutions worldwide. It operates through five segments: Healthcare, Automotive, Enterprise, Imaging, and Other.

The Healthcare segment offers clinical speech and clinical language understanding solutions, such as Dragon Medical, a dictation software that allows physicians to capture and document patient care in real-time; transcription solutions, which enable physicians to streamline clinical documentation with transcription platforms; clinical document improvement and coding solutions; diagnostic solutions; and professional and personal productivity solutions.

The Automotive segment provides branded and personalized virtual assistants and connected car services for automotive manufacturers and their suppliers.

The Enterprise segment offers On-Premise solutions and services, an automated customer service solution that comprises automated speech recognition, voice biometrics, transcription, text-to-speech, and dialog and analytics products; and On-Demand multichannel cloud, a platform, which offers enterprises the ability to implement automatic customer service.

The Imaging segment provides multi-function printer (MFP) scanning and document management solutions; MFP printing and document management solutions to capture and automate paper to digital workflows; and PDF and OCR software for capturing, creation, and management of document workflows.

The Other segment offers voicemail transcription and other value-added services to mobile operators; and speech recognition solutions and predictive text technologies for handset devices. Nuance Communications, Inc. has a strategic partnership with Mila to collaborate on research and advance work in machine learning.

The company was formerly known as ScanSoft, Inc. and changed its name to Nuance Communications, Inc. in October 2005. Nuance Communications, Inc. was founded in 1992 and is headquartered in Burlington, Massachusetts.

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