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Why EPAM Systems (EPAM) Stock Is Soaring Today

Stocks in this article: EPAM

NEW YORK (TheStreet) -- EPAM Systems (EPAM) shares are up 6.2% to $32.74 in trading on Friday.

The jump follows the company's announcement that it expects its first quarter 2014 earnings results to be ahead of the high end of their guidance for the quarter.

The global IT service provider is set to release its earnings report on April 30.

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"Due to the consistent level of clients' demands, we increased our delivery headcount in the country (Ukraine) by over 5% during the first three months of this year and we anticipate our Q1 results to be above the high end of our guidance for that period. We will provide a detailed update during our Q1 earnings call," said CEO Arkadiy Dobkin.

TheStreet Ratings team rates EPAM SYSTEMS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate EPAM SYSTEMS INC (EPAM) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The revenue growth greatly exceeded the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 25.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EPAM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.83, which clearly demonstrates the ability to cover short-term cash needs.
  • EPAM SYSTEMS INC has improved earnings per share by 18.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EPAM SYSTEMS INC increased its bottom line by earning $1.28 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $1.28).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from $15.00 million to $18.76 million.
  • Net operating cash flow has increased to $46.43 million or 29.84% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.47%.
  • You can view the full analysis from the report here: EPAM Ratings Report
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