Why Financial Engines (FNGN) Is Down Today

NEW YORK (TheStreet) -- Financial Engines  (FNGN) was plunging 11.53% to $55 on Friday afternoon after the company, which helps customers plan retirement, reported fourth-quarter results and issued guidance for the fiscal year 2014 that came up short of analysts' expectations.

The company noted profit of $9.3 million, or 17 cents per share, up from $6.5 million, or 13 cents per share, in the same period one year ago. Adjusted earnings for the quarter were $11.9 million, or 22 cents per share, which was just shy of expectations of 23 cents a share, according to analysts polled by Thomson Reuters.

Revenue spiked 27% year over year to $65.2 million from $51.4 million, but analysts expected revenues of $65.86 million.

For the full year 2014, the company issued revenue guidance of $274 million to $279 million, while analysts expect $287.72 million.

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TheStreet Ratings team rates FINANCIAL ENGINES INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate FINANCIAL ENGINES INC (FNGN) 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, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and solid stock price performance. 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 greatly exceeded the industry average of 17.1%. Since the same quarter one year prior, revenues rose by 28.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FINANCIAL ENGINES 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 year. We feel that this trend should continue. During the past fiscal year, FINANCIAL ENGINES INC increased its bottom line by earning $0.38 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.38).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 70.5% when compared to the same quarter one year prior, rising from $4.78 million to $8.15 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, FINANCIAL ENGINES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 90.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: FNGN Ratings Report

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