Veeva Systems Q3 Earnings: Is VEEV Expensive at 78.0x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Veeva Systems Inc. (NYSE:VEEV) is scheduled to report Q3 earnings results on November 26, 2019, at 01:30 PM PST. You can find more information about the conference call here.

The company is expected to report earnings of $0.54/share on revenue of $274.7 million. The consensus earnings per share (EPS) of $0.54/share is based on a poll of 16 analysts and represents a growth of 20.3% over the same quarter last year when the company reported earnings of $0.45/share.

The revenue forecast of $274.7 million based on a poll of 15 analysts implies a year-over-year (YoY) growth of 22.2%. Last year the company reported $224.7 million in revenue for the quarter.

Expected to report EPS growth of $0.09/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $274.66 $224.73 22.2%
EPS $0.54 $0.45 20.3%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance. What are your expectations from Veeva Systems for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.49 $0.55 12.2% Beat
Q1, 2020 $0.45 $0.50 12.4% Beat
Q4, 2019 $0.40 $0.45 12.5% Beat
Q3, 2019 $0.38 $0.45 18.4% Beat
Q2, 2019 $0.34 $0.39 14.7% Beat
Q1, 2019 $0.30 $0.33 9.4% Beat
Q4, 2018 $0.21 $0.23 9.5% Beat
Q3, 2018 $0.21 $0.25 19.0% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Veeva Systems’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 July 31, 2019, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-27 $162.67 $164.12 0.9% Increase
2019-05-29 $139.54 $154.30 10.6% Increase
2019-02-26 $119.78 $116.24 -3.0% Decline
2018-11-28 $89.79 $98.69 9.9% Increase

Fundamentals And Technical Analysis

Veeva Systems is currently trading at $156.46/share, up 2.1% for the day. The company is trading at approximately 88.4% of its 52-week high of $176.90/share. The company’s stock price is down -4.7% since the last earnings report and up 3.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 57.89 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 78.0x and a forward P/E multiple of 66.5x. Veeva Systems’s current share price also implies a price-to-book (P/B) multiple of 15.5x. The following table summarizes some other key fundamental ratios:

Data as of November 25, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date July 31, 2019
Stock Price (Current) $156.46
P/E Ratio 78.0x
P/E Ratio (Fwd) 66.5x
PEG Ratio 3.9
Total Debt to Capital (%) 0.1%
Levered Free Cash Flow $400.9 million
Enterprise Value / EBITDA 72.8x

Source: Finbox

Company Profile: Veeva Systems Inc.

Veeva Systems Inc. is a large-cap stock with a market capitalization of $22.682 billion and a total enterprise value of $21.272 billion. The company operates in the Healthcare sector and the Health Care Technology industry.

Veeva Systems Inc. provides cloud-based software for the life sciences industry in North America, Europe, the Asia Pacific, and internationally. The company offers Veeva Commercial Cloud, a suite of multichannel customer relationship management applications, data solutions, and master data management solutions; and Veeva Vault, a cloud-based enterprise content and data management applications for managing commercial functions, including medical, sales, and marketing, as well as research and development functions, such as clinical, regulatory, quality, and safety. It also provides professional and support services in the areas of implementation and deployment planning and project management; requirements analysis, solution design, and configuration; systems environment management and deployment services; services focused on advancing or transforming business and operating processes related to Veeva solutions; technical consulting services related to data migration and systems integrations; training on its solutions; and ongoing managed services that include outsourced systems administration.

The company was formerly known as Verticals onDemand, Inc. and changed its name to Veeva Systems Inc. in April 2009. Veeva Systems Inc. was founded in 2007 and is headquartered in Pleasanton, California.

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