Cornerstone OnDemand (NasdaqGS:CSOD) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Cornerstone OnDemand, Inc. (NasdaqGS:CSOD) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.21/share on revenue of $188.4 million. The consensus earnings per share (EPS) of $0.21/share is based on a poll of 10 analysts and represents a decline in eps of −33.5% over the same quarter last year, when the company reported earnings of $0.31/share.

The revenue forecast of $188.4 million based on a poll of 9 analysts implies a year-over-year (YoY) growth in revenue of 30.0%. Last year the company reported $145 million in revenue for the quarter.

Expected to report EPS contraction of −33.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $188.40 $144.95 30.0%
EPS $0.21 $0.31 −33.5%

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 Cornerstone OnDemand, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.22 $0.40 79.8% Beat
Q1, 2020 $0.24 $0.23 −6.1% Missed
Q4, 2019 $0.34 $0.43 27.5% Beat
Q3, 2019 $0.27 $0.31 14.0% Beat
Q2, 2019 $0.21 $0.19 −8.5% Missed
Q1, 2019 $0.19 $0.25 31.6% Beat
Q4, 2018 $0.23 $0.24 6.4% Beat
Q3, 2018 $0.18 $0.23 24.8% 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 June 30, 2020, 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
August 10, 2020 $36.30 $36.64 0.9% Increase
May 11, 2020 $36.75 $35.24 −4.1% Decline
February 24, 2020 $57.23 $39.42 −31.1% Decline
November 5, 2019 $58.76 $57.29 −2.5% Decline

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 −1.18, the model suggests that the company is likely an earnings manipulator. A value of −1.18 implies a 11.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

Cornerstone OnDemand, Inc. is currently trading at $37.63/share, down −2.9% for the day. The company is trading at approximately 58.9% of its 52-week high of $64.45/share. The company’s stock price is up 2.7% since the last earnings report and down −1.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 63.25 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:CSOD Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −138.31 and a forward P/E multiple of 33.98.

Cornerstone OnDemand, Inc.’s current share price also implies a price-to-book (P/B) multiple of 10.05. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $37.63
P/E Ratio −138.3x
P/E Ratio (Fwd) 34.0x
PEG Ratio −23.4
Total Debt / Total Capital 34.6%
Levered Free Cash Flow $104.8 million
EV / EBITDA 60.2x

Finbox

Cornerstone OnDemand, Inc. is a mid-cap stock with a market capitalization of $2.493 billion and a total enterprise value of $3.676 billion. The company operates in the Information Technology sector and the Software industry.

Cornerstone OnDemand, Inc., together with its subsidiaries, provides learning and people development solutions through software-as-a-service model worldwide. Its enterprise people development solution comprises four product suites, such as Recruiting Suite that helps organizations to attract, hire, and onboard the right employees; Learning Suite, which provides robust, a modern learning management software to supports compliance, knowledge sharing, and employee-driven development training; Performance Suite that provides tools to manage goal setting, performance reviews, competency assessments, development plans, continuous feedback, compensation management, and succession planning; and HR Suite, which provides an aggregated view of all employee data with workforce planning, self-service management, and compliance reporting capabilities. The company also offers professional services, including application configuration, system integration, business process re-engineering, change management, and training. Cornerstone OnDemand, Inc. sells its software, content, and services directly through its sales force and indirectly through its domestic and international network of distributors. It serves business services, financial services, healthcare, pharmaceuticals, insurance, manufacturing, retail, and technology industries. Cornerstone OnDemand, Inc. was founded in 1999 and is headquartered in Santa Monica, California.

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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