Citrix Systems (NasdaqGS:CTXS) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Citrix Systems, Inc. (NasdaqGS:CTXS) is scheduled to report Q3 earnings results before markets open for trading on October 22, 2020.

The company is expected to report earnings of $1.25/share on revenue of $759 million. The consensus earnings per share (EPS) of $1.25/share is based on a poll of 17 analysts and represents a decline in eps of −18.0% over the same quarter last year, when the company reported earnings of $1.52/share.

The revenue forecast of $759 million based on a poll of 14 analysts implies a year-over-year (YoY) growth in revenue of 3.6%. Last year the company reported $732.9 million in revenue for the quarter.

Expected to report EPS contraction of −18.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $759.02 $732.90 3.6%
EPS $1.25 $1.52 −18.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Citrix Systems, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.23 $1.53 24.0% Beat
Q1, 2020 $1.17 $1.73 47.4% Beat
Q4, 2019 $1.68 $1.71 1.9% Beat
Q3, 2019 $1.26 $1.52 20.2% Beat
Q2, 2019 $1.34 $1.21 −9.5% Missed
Q1, 2019 $1.17 $1.27 8.1% Beat
Q4, 2018 $1.59 $1.67 4.8% Beat
Q3, 2018 $1.25 $1.40 11.6% 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 June 30, 2020, the stock price reacted by falling −14.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $167.15 $142.49 −14.8% Decline
April 23, 2020 $151.69 $146.04 −3.7% Decline
January 22, 2020 $117.85 $128.48 9.0% Increase
October 24, 2019 $103.67 $105.64 1.9% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.71, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.71 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Citrix Systems, Inc. is currently trading at $134.84/share, down −2.5% for the day. The company is trading at approximately 77.7% of its 52-week high of $173.56/share. The company’s stock price is down −5.4% since the last earnings report and down −6.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 43.49 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:CTXS Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 21.57 and a forward P/E multiple of 23.48.

Citrix Systems, Inc.’s current share price also implies a price-to-book (P/B) multiple of −177.97. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $134.84
P/E Ratio 21.6x
P/E Ratio (Fwd) 23.5x
PEG Ratio 0.4
Total Debt / Total Capital 10.1%
Levered Free Cash Flow $1.01 billion
EV / EBITDA 22.0x

Finbox

Citrix Systems, Inc. is a large-cap stock with a market capitalization of $16.657 billion and a total enterprise value of $17.72 billion. The company operates in the Information Technology sector and the Software industry.

Citrix Systems, Inc. provides workspace, networking, and professional services worldwide. The company offers workspace services, including Citrix Virtual Apps and Desktops; Citrix Content Collaboration, a cloud-based file sharing and storage solution, which provides enterprise-class data services on various corporate and personal mobile devices for businesses; Citrix Endpoint Management for mobility and device management capabilities; and Workspace Intelligence that customizes and streamlines user workflows, as well as microapp creation with low-code tooling, automates tasks and functions. It also provides networking products comprising Citrix ADC, an application delivery controller and load balancing solution for web, traditional and cloud-native applications; and Citrix SD-WAN, a WAN Edge solution that delivers flexible, automated, secure connectivity and performance for the workspace, as well as Citrix Analytics for security, performance, and operations. In addition, the company offers customer services, hardware maintenance, consulting, and product training and certification services. The company serves health care, financial services, technology, manufacturing, consumer, and government agencies. It markets and licenses its products through resellers, distributors, systems integrators, independent software vendors, original equipment manufacturers, and service providers. The company was formerly known as Citrus Systems, Inc. and changed its name to Citrix Systems, Inc. in March 2009. Citrix Systems, Inc. was founded in 1989 and is headquartered in Fort Lauderdale, Florida.

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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