Why TIBCO Software (TIBX) Stock Is Sliding After Hours

NEW YORK (TheStreet) -- TIBCO Software (TIBX) stock is sliding in extended trading Tuesday after the company announced preliminary figures for its second quarter which came in below analysts' estimates. After the bell, shares tumbled 12.7% to $18.15.

In its May-ended quarter, the company expects total revenue between $250 million and $252 million, flat sequentially, and below estimates of $267.5 million according to analysts surveyed by Thomson Reuters. Management guided adjusted net income between 12 cents and 13 cents a share, below expectations of 21 cents a share. 

"After a solid first quarter, revenue fell short of expectations in the second quarter, primarily due to lower-than-expected sales of Spotfire," said CEO Vivek Ranadive.

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TheStreet Ratings team rates TIBCO SOFTWARE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIBCO SOFTWARE INC (TIBX) 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 increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the Software industry average, but is less than that of the S&P 500. The net income increased by 27.8% when compared to the same quarter one year prior, rising from $9.51 million to $12.15 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TIBCO SOFTWARE INC has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TIBCO SOFTWARE INC reported lower earnings of $0.51 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.51).
  • Net operating cash flow has decreased to $52.87 million or 16.37% 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 has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, TIBCO SOFTWARE INC's return on equity is below that of both the industry average and the S&P 500.
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