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Nuance Communications (NUAN) Earnings: What to Expect

NEW YORK (TheStreet) -- Nuance Communications (NUAN) is set to report full first-quarter results for the period ended Dec. 31 after the bell on Feb. 10.

The voice and language software developer announced preliminary results in January. Nuance expects first-quarter revenue between $487 million and $491 million and per-share earnings of 23 cents to 24 cents.

The preliminary results are above prior guidance of sales between $477 million and $487 million and net income of 18 cents to 21 cents a share.

Analysts polled by Thomson Reuters anticipate net income of 21 cents a share on $485.73 million in sales.

TheStreet Ratings team rates NUANCE COMMUNICATIONS INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate NUANCE COMMUNICATIONS INC (NUAN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NUAN's revenue growth trails the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • NUAN's debt-to-equity ratio of 0.89 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that NUAN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.53 is high and demonstrates strong liquidity.
  • The gross profit margin for NUANCE COMMUNICATIONS INC is rather high; currently it is at 63.64%. Regardless of NUAN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NUAN's net profit margin of -6.84% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 127.5% when compared to the same quarter one year ago, falling from $117.64 million to -$32.32 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, NUANCE COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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