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NEW YORK (TheStreet) -- CommVault Systems (CVLT) - Get CommVault Systems, Inc. Report fell 8.6% Wednesday despite its third-quarter earnings beating analysts' estimates. 

In its fiscal third quarter, CommVault posted a 19% year-over-year revenue increase to $153.3 million. Analysts polled by Capital IQ expected revenue of $149.1. Earnings were 54 cents a share, 10 cents better than the estimated 44 cents a share.

CommVault said software revenue grew by 20% year over year because of  "increased demand and brand recognition" of its Simpana 10 software suite. The company said it saw all-time high volume of enterprise sales for its software.

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

TheStreet Recommends

"We rate COMMVAULT SYSTEMS INC (CVLT) a BUY. This is driven by some important positives, 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, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. 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:

  • CVLT's revenue growth has slightly outpaced the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 20.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CVLT 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 2.65, which clearly demonstrates the ability to cover short-term cash needs.
  • COMMVAULT SYSTEMS INC has improved earnings per share by 20.7% 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, COMMVAULT SYSTEMS INC increased its bottom line by earning $1.10 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.10).
  • 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 Software industry average. The net income increased by 24.9% when compared to the same quarter one year prior, going from $13.90 million to $17.35 million.
  • The gross profit margin for COMMVAULT SYSTEMS INC is currently very high, coming in at 87.23%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.23% trails the industry average.
  • You can view the full analysis from the report here: CVLT Ratings Report