By late afternoon, shares had tumbled 13.5% to $42.83.
In its third quarter, the software developer earned an adjusted 28 cents a share, 9 cents higher than analysts surveyed by Thomson Reuters had forecast. Revenue soared 30.5% year over year to $103.59 million, exceeding expectations of $92.82 million.
TheStreet Ratings team rates ASPEN TECHNOLOGY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ASPEN TECHNOLOGY INC (AZPN) a BUY. This is driven by a number of 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, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 27.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AZPN 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Software industry and the overall market, ASPEN TECHNOLOGY INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- ASPEN TECHNOLOGY INC reported significant earnings per share improvement 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, ASPEN TECHNOLOGY INC turned its bottom line around by earning $0.47 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus $0.47).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 134.1% when compared to the same quarter one year prior, rising from $9.94 million to $23.26 million.
- You can view the full analysis from the report here: AZPN Ratings Report