QAD Q3 Earnings Preview: QADA Up 33% Since Last Report

in EARNINGS/INVESTING IDEAS by

QAD Inc. (NASDAQGS:QADA) is scheduled to report Q3 earnings results after the close of regular trading hours on Tuesday, November 26, 2019. Management will conduct a conference call at 5 p.m. Eastern Time on the same afternoon to discuss financial performance.

The company is expected to report earnings of $0.08/share on revenue of $78.275 million. The consensus earnings per share (EPS) of $0.08/share is based on a poll of 2 analysts and represents a decline of -65.2% over the same quarter last year when the company reported earnings of $0.23/share.

The revenue forecast of $78.275 million based on a poll of 4 analysts implies a year-over-year (YoY) decline of -1.6%. Last year the company reported $79.577 million in revenue for the quarter.

Expected to report EPS decline of -$0.15/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $78.28 $79.58 -1.6%
EPS $0.08 $0.23 -65.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters. What are your expectations from QAD for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.04 -$0.05 NM Missed
Q1, 2020 -$0.11 -$0.03 NM Beat
Q4, 2019 $0.14 $0.44 213.7% Beat
Q3, 2019 $0.14 $0.23 64.0% Beat
Q2, 2019 $0.06 $0.12 104.2% Beat
Q1, 2019 $0.10 $0.12 19.7% Beat
Q4, 2018 $0.13 -$0.14 NM Missed
Q3, 2018 $0.08 $0.10 24.5% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to QAD’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 reacted by increasing by 2.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-21 $37.15 $38.20 2.8% Increase
2019-05-29 $47.56 $42.90 -9.8% Decline
2019-03-20 $45.16 $42.35 -6.2% Decline
2018-11-20 $40.25 $46.61 15.8% Increase

Fundamentals And Technical Analysis

QAD is currently trading at $50.64/share, up 1.3% for the day. The company is trading at near its 52-week high. The company’s stock price is up 32.6% since the last earnings report and up 5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 58.56 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 -109.3x and a forward P/E multiple of 210.9x.

QAD’s current share price also implies a price-to-book (P/B) multiple of 8.1x. The following table summarizes some other key fundamental ratios:

Data as of November 26, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date July 31, 2019
Stock Price (Current) $50.64
P/E Ratio -109.3x
P/E Ratio (Fwd) 210.9x
PEG Ratio 1.0
Total Debt to Capital (%) 3.3%
Levered Free Cash Flow $17.996 million
Enterprise Value / EBITDA 217.8x

Source: Finbox

Company Profile: QAD Inc.

QAD Inc. is a small-cap stock with a market capitalization of $973.3 million and a total enterprise value of $862.4 million. The company operates in the Information Technology sector and Software industry.

QAD Inc. provides enterprise software solutions for manufacturing companies in the automotive, life sciences, consumer products, food and beverage, high technology, and industrial products industries worldwide.

The company offers QAD Cloud ERP and QAD Enterprise Applications, an integrated suite of software applications, which support the core business processes. Its QAD Enterprise Applications include software solutions, such as QAD Financials to manage and control finance and accounting processes; QAD Customer Management for manufacturers to acquire new customers; QAD Manufacturing, which supports manufacturing business processes; QAD Automation Solutions that improve manufacturers’ material transaction processing; QAD Demand and Supply Chain Planning that fulfills materials planning and logistics requirements; QAD Supply Chain Execution that offers tools to support inventory and warehouse management; and QAD Transportation Management to manage and optimize outside carriers for shipments.

The company’s QAD Enterprise Applications also comprise QAD Service and Support that handles service calls, manages service queues, and organizes mobile field resources; QAD Enterprise Asset Management to manage, maintain, and install capital equipment; Action Centers with Embedded Analytics; and QAD Analytics that provides data to measure performance. It also offers QAD Enterprise Quality Management that provides quality management and regulatory compliance solutions; QAD Interoperability, which integrates QAD Enterprise Applications with other non-QAD core business applications; and QAD Internationalization, which supports companies that manufacture and distribute their products worldwide.

In addition, it provides customer support, product updates, maintenance, and professional services. The company markets its products through direct and indirect sales channels; and distributors and sales agents. QAD Inc. was founded in 1979 and is headquartered in Santa Barbara, California.

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