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Aspen Technology (AZPN) Exceeds First Quarter Earnings and Revenue Estimates – October 26, 2022

Aspen technology (AZPN Free Report) came out with quarterly earnings of $2.20 per share, beating Zacks consensus estimate of $1.23 per share. That compares to earnings of $0.77 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 78.86%. A quarter ago, this software maker was expected to post a profit of $2.15 per share when it was actually making a profit of $2.43, a surprise 13.02% .

In the past four quarters, the company has exceeded consensus EPS estimates three times.

Aspen Technology, which is part of the Zacks Internet – Software industry, reported revenue of $250.82 million for the quarter ended September 2022, beating Zacks’ consensus estimate by 10.03%. That compares to revenues of $136.02 million a year ago. The company has exceeded consensus revenue estimates only once in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Shares of Aspen Technology are up about 66% year-to-date compared to the -19% decline in the S&P 500.

What’s next for Aspen technology?

With Aspen Technology outperforming the market so far this year, the question on investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this publication of the results, the trend of revisions of estimates for Aspen Technology: favorable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation results in a Zacks No. 2 (buy) ranking for the stock. Thus, stocks are expected to outperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.61 on $281.32 million in revenue for the upcoming quarter and $6.77 on $1.17 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Internet – Software is currently in the top 31% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, 2U (OF THEM Free Report), has yet to report results for the quarter ended September 2022.

This online education service provider is expected to post a quarterly loss of $0.02 per share in its upcoming report, representing a year-over-year change of +91.3%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

2U’s revenue is expected to be $231.62 million, down 0.3% from the year-ago quarter.