Aspen Technology Q2 Earnings: Can AZPN Hit Its $0.80 EPS Target?

in EARNINGS/INVESTING IDEAS by

Aspen Technology, Inc. (NASDAQGS:AZPN) is scheduled to report Q2 earnings results on January 29, 2020, after the U.S. financial markets close. The conference call and  conference call and webcast presentation will start the same day at 4:30 p.m. (Eastern Time).

The company is expected to report earnings of $0.80/share on revenue of $136.2 million. The consensus earnings per share (EPS) of $0.80/share is based on a poll of 7 analysts and represents a decline of -13.0% over the same quarter last year when the company reported earnings of $0.92/share.

The revenue forecast of $136.2 million based on a poll of 7 analysts implies a year-over-year (YoY) decline of -3.0%. Last year the company reported $140.4 million in revenue for the quarter.

Expected to report EPS decline of -$0.12/share for Q2, 2019
Metric Expected Prior Year YoY Change
Revenue $136.16 $140.42 -3.0%
EPS $0.80 $0.92 -13.0%

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 Aspen Technology for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2020 $0.61 $0.79 29.5% Beat
Q4, 2019 $1.10 $1.59 44.5% Beat
Q3, 2019 $0.84 $0.96 14.3% Beat
Q2, 2019 $0.64 $0.92 43.8% Beat
Q1, 2019 $0.58 $0.64 10.3% Beat
Q4, 2018 $0.55 $0.59 7.3% Beat
Q3, 2018 $0.51 $0.58 13.7% Beat
Q2, 2018 $0.51 $0.59 16.8% Beat

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 September 30, 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
2019-10-30 $115.52 $115.11 -0.4% Decline
2019-08-07 $126.35 $139.75 10.6% Increase
2019-04-24 $112.11 $118.51 5.7% Increase
2019-01-23 $88.93 $100.80 13.3% Increase

Fundamentals And Technical Analysis

Aspen Technology is currently trading at $141.97/share, up 0.2% for the day. The company is trading at approximately 99.8% of its 52-week high of $142.32/share. The company’s stock price is up 23.3% since the last earnings report and up 1.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 84.07 suggests the company is trading in technically overbought 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 35.7x and a forward P/E multiple of 36.9x. Aspen Technology’s current share price also implies a price-to-book (P/B) multiple of 24.6x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2020.Q1
Period End Date September 30, 2019
Stock Price (Current) $141.97
P/E Ratio 35.7x
P/E Ratio (Fwd) 36.9x
PEG Ratio 3.9
Total Debt to Capital (%) 3.5%
Levered Free Cash Flow $247.1 million
Enterprise Value / EBITDA 33.0x

Source: Finbox

Company Profile: Aspen Technology, Inc.

Aspen Technology, Inc. is a mid-cap stock with a market capitalization of $9.665 billion and a total enterprise value of $9.962 billion. The company operates in the Information Technology sector and the Software industry.

Aspen Technology, Inc., together with its subsidiaries, provides asset optimization solutions in the United States, Europe, the Asia Pacific, Canada, Latin America, and the Middle East. The company operates through two segments, Subscription and Software.

It supplies asset optimization solutions that optimize the asset design, operations, and maintenance lifecycle in various industrial environments. The company software suites include aspenONE Engineering, aspenONE Manufacturing, and Supply Chain, and aspenONE Asset Performance that are integrated applications, which allow end-users to design process manufacturing environments, monitor operational performances, respond and adapt to operational changes, predict asset reliability and equipment failure, and manage planning and scheduling activities, as well as collaborate across these functions and activities.

It also provides software maintenance and support, professional, and training services. The company’s customers comprise companies that are engaged in the process and other capital-intensive industries, such as energy, chemicals, engineering, and construction, as well as pharmaceuticals, transportation, power, metals and mining, pulp and paper, and consumer packaged goods.

Aspen Technology, Inc. was founded in 1981 and is headquartered in Bedford, Massachusetts.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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