Dynatrace Q2 Earnings: Can NYSE:DT Hit Its $0.10 EPS Target?

in EARNINGS/INVESTING IDEAS by

Dynatrace, Inc. (NYSE:DT) is scheduled to report Q2 earnings results before markets open for trading on October 28, 2020.

The company is expected to report earnings of $0.10/share on revenue of $160.8 million. The consensus earnings per share (EPS) of $0.10/share is based on a poll of 19 analysts and represents a growth in eps of 66.6% over the same quarter last year, when the company reported earnings of $0.06/share.

The revenue forecast of $160.8 million based on a poll of 18 analysts implies a year-over-year (YoY) growth in revenue of 24.2%. Last year the company reported $129.4 million in revenue for the quarter.

Expected to report EPS growth of 66.6% for Q2, 2021
Metric Expected Prior Year YoY Change
Revenue $160.75 $129.38 24.2%
EPS $0.10 $0.06 66.6%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 5 tracked quarters of exceeding earnings guidance.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2021 $0.10 $0.13 31.5% Beat
Q4, 2020 $0.08 $0.11 42.9% Beat
Q3, 2020 $0.07 $0.10 49.9% Beat
Q2, 2020 $0.04 $0.06 47.3% Beat
Q1, 2020 $0.03 $0.04 50.7% 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 increasing 4.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $40.74 $42.37 4.0% Increase
May 12, 2020 $33.50 $32.93 −1.7% Decline
January 29, 2020 $28.68 $32.06 11.8% Increase
October 30, 2019 $18.51 $20.23 9.3% 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 −2.59, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.59 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Dynatrace, Inc. is currently trading at $43.16/share, down −1.6% for the day. The company is trading at approximately 88.4% of its 52-week high of $48.85/share. The company’s stock price is up 1.9% since the last earnings report and down −1.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 56.70 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:DT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −34.08 and a forward P/E multiple of 90.13.

Dynatrace, Inc.’s current share price also implies a price-to-book (P/B) multiple of 12.27. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2021.Q1
Period End Date June 30, 2020
Stock Price (Current) $43.16
P/E Ratio −34.1x
P/E Ratio (Fwd) 90.1x
PEG Ratio 0.3
Total Debt / Total Capital 4.3%
Levered Free Cash Flow -$159.6 million
EV / EBITDA −184.4x

Finbox

Dynatrace, Inc. is a large-cap stock with a market capitalization of $12.131 billion and a total enterprise value of $12.44 billion. The company operates in the Information Technology sector and the Software industry.

Dynatrace, Inc. provides a software intelligence platform for the enterprise cloud applications. It operates Dynatrace, a platform for running an enterprise cloud. The company’s products include AppMon that works in various application environments, such as mobile apps, web apps, web browsers, web servers, Java, .NET, Node.js, PHP, databases, middleware, and mainframe; Classic Real User Monitoring, which tracks user’s experience from an edge devices comprising smart phones, tablets, PCs, or kiosk through cloud services, as well as customer’s web tiers; Network Application Monitoring that provides enterprise applications, network services, user experience, and application delivery across wide-area networks; and Synthetic Classic, which offers customer experience, as well as is used to monitor application and application program interface availability and performance. Its platform allows its customers to modernize and automate IT operations, develop and release software, and enhance user experiences. The company also offers implementation, consulting, and training services. Dynatrace, Inc. markets its products through a combination of direct sales team and a network of partners, including resellers, system integrators, and managed service providers. It serves customers in various industries comprising banking, insurance, retail, manufacturing, travel, and software. The company operates in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Dynatrace, Inc. is headquartered in Waltham, Massachusetts.

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