Bill.com Beats Earnings Estimates, but Are These Stocks Better Buys?
Bill.com (BILL) reported better-than-expected revenue and earnings in the last reported quarter. Despite its better-than-expected fiscal fourth quarter results, we think the stock is best avoided now, given its poor...
Bill.com (BILL) reported better-than-expected revenue and earnings in the last reported quarter. Despite its better-than-expected fiscal fourth quarter results, we think the stock is best avoided now, given its poor fundamentals. However, investors can consider investing in its industry peers Progress Software (PRGS) and Commvault Systems (CVLT), given their strong fundamentals and solid growth prospects. Let's discuss….
Cloud-based software provider Bill.com Holdings, Inc. (BILL) recently reported its fiscal fourth-quarter results, surpassing Wall Street estimates on both EPS and revenues. The company's revenue increased 155.8% year-over-year to $200.22 million, coming in higher than the consensus estimate of $183.10 million. Its non-GAAP loss per share of $0.03 came much lower than the consensus estimate of a loss of $0.13.
Despite guiding solid revenue and earnings growth for the first quarter of fiscal 2023, the company's weak financials are expected to keep the stock under pressure. The stock has declined 34.6% year-to-date.
BILL's non-GAAP general and administrative expenses increased 80.3% year-over-year to $42.49 million for the fourth quarter ended June 30, 2022. The company's total operating expenses increased 86.5% year-over-year to $240.13 million.
Analysts expect BILL's EPS for fiscal 2023 to remain negative. Its EPS is expected to decline 28.7% per annum over the next five years. Over the past nine months, the stock has fallen 45.7% to close the last trading session at $162.91.
BILL's weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F grade for Stability and a D for Value, Momentum, and Quality. It is ranked #129 out of 154 stocks in the F-rated Software – Application industry. Click here to see BILL's ratings for Growth and Sentiment.
Progress Software Corporation (PRGS)
PRGS develops, deploys, and manages business applications. Its products include OpenEdge, Developer Tools, Sitefinity, Corticon, DataDirect Connect, MOVEit, Chef, WhatsUp Gold, and Kemp Flowmon Network Visibility.
On June 29, 2022, PRGS announced the release of Progress Flowmon, network visibility, and security solutions. PRGS' VP, Product Strategy, Enterprise Application Experience, Jason Dover, said, "With the latest release of Flowmon network solution, Progress extends capabilities in this area by simplifying network visibility for customers who are expanding their footprint in the public cloud."
PRGS' revenue increased 21.4% year-over-year to $148.74 million for the second quarter ended May 31, 2022. Its non-GAAP income from operations increased 23.3% year-over-year to $61.29 million. The company's non-GAAP net income increased 25.6% year-over-year to $45.88 million. Also, its non-GAAP EPS came in at $1.04, representing an increase of 27% year-over-year.
For the quarter ending November 30, 2022, PRGS' EPS and revenue are expected to increase 20% and 14.9% year-over-year to $1.10 and $165.19 million, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 13.4% to close the last trading session at $49.45.
PRGS' POWR Ratings reflect solid prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Growth and Value. It is ranked #3 in the Software – Application industry. To see the other ratings of PRGS for Momentum, Stability, and Sentiment, click here.
Commvault Systems, Inc. (CVLT)
CVLT is a leader in delivering data readiness, enabling its customers to intelligently manage data with solutions that store, protect, optimize, and use data. Its software automates tasks and uses data, enabling its customers to make informed business decisions. Also, its solutions work in the cloud, SaaS, and on-premise environments.
CVLT's total revenues increased 7.9% year-over-year to $197.98 million for the first quarter ended June 30, 2022. The company's Services segment revenue increased 4.2% year-over-year to $105.54 million. Also, its non-GAAP EPS came in at $0.64, representing an increase of 3.2% year-over-year.
Analysts expect CVLT's EPS and revenue for the quarter ended September 30, 2022, to increase 4.1% and 4.9% year-over-year to $0.50 and $186.56 million, respectively. It surpassed Street EPS estimates in three of the trailing four quarters. Over the past three months, the stock has lost 2.4% to close the last trading session at $57.01.
CVLT's strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Growth and Value. It is ranked #5 out of 154 stocks in the same industry. Click here to see the other ratings of CVLT for Momentum, Stability, and Sentiment.
BILL shares rose $1.59 (+0.98%) in premarket trading Tuesday. Year-to-date, BILL has declined -34.61%, versus a -12.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master's degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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