NEW YORK (TheStreet) -- NetScout Systems (NTCT) jumped 14.4% to $36.49 Thursday, hitting a 14-year high of $36.70, after it beat estimates in both earnings and revenue in its third-quarter earnings report.
The software company reported earnings of 50 cents a share, beating the Capital IQ Consensus estimate of 42 cents a share by 8 cents. Revenues for NetScout rose 20.2% year over year to $110.6 million, beating the consensus estimates of $102.75 million for the quarter.
Along with the results, NetScout narrowed its guidance range and issued an upside guidance for 2014. The company now expects earnings between $1.48 and $1.50 a share for the year, compared to analysts' estimate of $1.45 a share. The new guidance calls for revenue between $392 million and $395 million, compared to analysts' estimate of $390.91 million.
NetScout's previous guidance called for between $1.40 and $1.50 a share in earnings and revenue between $385 million and $400 million.
"Our results this quarter were driven by key factors, including new product introductions for the enterprise sector, expanded deployments by service providers and increased traction with our complementary packet flow switch product line," CEO Anil Singhal said in a press release.
TheStreet Ratings team rates NETSCOUT SYSTEMS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETSCOUT SYSTEMS INC (NTCT) a BUY. This is driven by several positive factors, 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, 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:
- NTCT's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NTCT 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. To add to this, NTCT has a quick ratio of 1.50, which demonstrates the ability of the company to cover short-term liquidity needs.
- NETSCOUT SYSTEMS INC's earnings per share improvement from the most recent quarter was slightly positive. 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, NETSCOUT SYSTEMS INC increased its bottom line by earning $0.95 versus $0.77 in the prior year. This year, the market expects an improvement in earnings ($1.46 versus $0.95).
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- The gross profit margin for NETSCOUT SYSTEMS INC is currently very high, coming in at 82.73%. Regardless of NTCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NTCT's net profit margin of 10.73% is significantly lower than the industry average.
- You can view the full analysis from the report here: NTCT Ratings Report