Insight Q3 Earnings: Buying Soaring NasdaqGS:NSIT Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Insight Enterprises, Inc. (NasdaqGS:NSIT) is scheduled to report Q3 earnings results before markets open for trading on November 3, 2020.

The company is expected to report earnings of $1.12/share on revenue of $2.007 billion. The consensus earnings per share (EPS) of $1.12/share is based on a poll of 6 analysts and represents a growth in eps of 2.1% over the same quarter last year, when the company reported earnings of $1.10/share.

The revenue forecast of $2.007 billion based on a poll of 6 analysts implies a year-over-year (YoY) growth in revenue of 4.9%. Last year the company reported $1.913 billion in revenue for the quarter.

Expected to report EPS growth of 2.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,007.08 $1,912.55 4.9%
EPS $1.12 $1.10 2.1%

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 Insight Enterprises, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.01 $1.75 74.0% Beat
Q1, 2020 $1.14 $1.30 13.7% Beat
Q4, 2019 $1.61 $1.57 −2.5% Missed
Q3, 2019 $1.07 $1.10 2.8% Beat
Q2, 2019 $1.39 $1.49 7.5% Beat
Q1, 2019 $0.90 $1.10 21.8% Beat
Q4, 2018 $1.12 $1.32 17.5% Beat
Q3, 2018 $1 $0.91 −9.3% Missed

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 6.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $51.94 $55.19 6.3% Increase
May 7, 2020 $51.95 $52.42 0.9% Increase
February 12, 2020 $67.41 $60.06 −10.9% Decline
November 6, 2019 $65.31 $63.47 −2.8% 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 −2.54, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.54 implies a 0.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

Insight Enterprises, Inc. is currently trading at $55.25/share, down −4.4% for the day. The company is trading at approximately 75.2% of its 52-week high of $73.22/share. The company’s stock price is up 0.1% since the last earnings report and down −10.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 41.55 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:NSIT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 12.77 and a forward P/E multiple of 10.35.

Insight Enterprises, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.59. 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) $55.25
P/E Ratio 12.8x
P/E Ratio (Fwd) 10.3x
PEG Ratio −1.4
Total Debt / Total Capital 28.1%
Levered Free Cash Flow $369.9 million
EV / EBITDA 7.9x

Finbox

Insight Enterprises, Inc. is a mid-cap stock with a market capitalization of $2.027 billion and a total enterprise value of $2.664 billion. The company operates in the Information Technology sector and the Electronic Equipment, Instruments & Components industry.

Insight Enterprises, Inc. provides information technology hardware, software, and services solutions in the United States, Canada, Europe, the Middle East, Africa, and the Asia-Pacific. It sources, procures, stages, configures, integrates, tests, deploys, and maintains IT products spanning endpoints to infrastructure; and offers software life cycle, and hardware warranty and software maintenance services. The company also provides desktop, notebook, tablet, and mobile devices coupled with cloud-based productivity solutions; managed solutions, such as spanning messaging, voice, video, and content management; and workplace services, including desk side support, remote service desk, automated self-service, and self-healing solutions. In addition, it offers various services, such as hybrid cloud, migration and consolidation, workload-platform alignment, converged/hyper converged solutions, and software-defined data center; data platform modernization services; integrated network and security solutions; and consulting, professional, managed, and support services. Further, the company provides digital signage, kiosk, tablet, and smartphone endpoints; custom-developed applications to enable client-to-customer engagement; custom-developed mobile, cloud, and Internet-of-Things applications; and custom solutions, which enable clients review insights within their data. Additionally, it sells hardware and software products; and offers enterprise data center solutions. The company was founded in 1988 and is headquartered in Tempe, Arizona.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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