Why Callidus Software (CALD) Stock Is Surging Today

NEW YORK (TheStreet) -- Callidus Software  (CALD) surged Friday after the company reported first-quarter earnings that surpassed analysts' expectations.

The company posted earnings per share of 3 cents, compared to a loss of 2 cents a share in the same period one year earlier. This was in line with analysts' estimates of 3 cents a share. Revenue increased 21.2% year over year to $30.9 million, which beat the consensus estimate of $29.52 million.

Callidus issued full-year EPS guidance in the range of 12 cents to 16 cents, while analysts polled by Thomson Reuters expect 14 cents. The company also issued revenue guidance in the range of $127.5 to $132.5 million, while analysts expect $127.99 million. For the second quarter, Callidus issued EPS guidance in the range of 1 cent to 3 cents.

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The stock was up 14.9% to $10.95 at 11:35 a.m. on Friday.

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Separately, TheStreet Ratings team rates CALLIDUS SOFTWARE INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CALLIDUS SOFTWARE INC (CALD) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has decreased to $6.12 million or 25.80% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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, CALLIDUS SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.01 is sturdy.
  • The gross profit margin for CALLIDUS SOFTWARE INC is rather high; currently it is at 69.25%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -23.12% is in-line with the industry average.
  • This stock has increased by 138.33% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in CALD do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: CALD Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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