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TheStreet Open House

How Will American Software (AMSWA) Stock React To Its Latest Earnings Results?

NEW YORK (TheStreet) -- American Software Inc. (AMSWA) reported its preliminary 2014 fourth quarter earnings results showing a 17% decrease in GAAP net earnings to $2.6 million, or 9 cents per fully diluted share, compared to $3.1 million, or 11 cents per fully diluted share for the 2013 fourth quarter.

The software services company posted a drop in adjusted net earnings to $2.9 million, or 10 cents per fully diluted share, compared to $3.4 million, or 12 cents per fully diluted share for the year ago period.

Total revenue increased 3% to $25.9 million for the most recent quarter over the year ago quarter.

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American Software also reported its preliminary fiscal 2014 financial results showing a 1% decrease in GAAP net earnings to $10.3 million, or 37 cents per fully diluted share, compared to $10.4 million, or 38 cents per fully diluted share for the 2013 fiscal year.

Adjusted net earnings for the fiscal year were $11.6 million, or 41 cents per fully diluted share, compared to $11.7, or 42 cents per fully diluted share for the same period last year.

Total revenue for the fiscal year ended April 30, 2014 were $100.6 million versus $100.5 million for the year ended April 30, 2013.

Separately, TheStreet Ratings team rates AMERICAN SOFTWARE as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERICAN SOFTWARE (AMSWA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. 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 stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AMSWA 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 2.60, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for AMERICAN SOFTWARE is rather high; currently it is at 58.43%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, AMSWA's net profit margin of 10.14% significantly trails the industry average.
  • You can view the full analysis from the report here: AMSWA Ratings Report
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