Why Terdata (TDC) Stock Is Down Today

NEW YORK (TheStreet) -- Teradata (TDC) was falling -9.6% to $39.75 Thursday after forecasting full-year EPS and revenue towards the low end of its previous range, and despite beating analysts' expectations in the first quarter.

For the first quarter Teradata reported earnings of 54 cents a share, beating the Capital IQ Consensus Estimate of 47 cents a share by 7 cents. Revenue grew 7% to $628 million, compared to analysts' expectations of $615.13 million.

Looking forward to full-year 2014 the company expects EPS in the lower of $2.85 to $3.00 a share, while analysts expect $2.92 a share for the year. Terdata expects revenue growth of 3% to 7%, to between about $2.77 billion and $2.88 billion. Analysts expect revenue of $2.83 billion for the year.

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TheStreet Ratings team rates TERADATA CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TERADATA CORP (TDC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and disappointing return on equity."

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

  • The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TDC's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TDC has a quick ratio of 1.82, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income has remained constant at $112.00 million when compared to the same quarter one year ago.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, TERADATA CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has decreased to $63.00 million or 49.19% 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.
  • You can view the full analysis from the report here: TDC 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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