Armed with solid fiscal first quarter earnings, a strong
double-digit jump in contract value, a new program offering and
estimated long-term earnings growth of 19.7%,
Advisory Board Co.
) surely offers an attractive investment opportunity for
This Zacks #1 Rank (Strong Buy) research, technology, and
consulting service provider has delivered eight positive earnings
surprises in the last 10 quarters with an average beat of almost
Strong Start to Fiscal 2013
On July 31, Advisory Board reported first quarter fiscal 2013
earnings of 25 cents per share, beating the Zacks Consensus
Estimate by 8.7% and year-ago earnings by a significant 32%.
The top line grossed $104.1 million, improving 30.3% year over
year. Contract Value totaled $411.6 million, increasing 25.8%.
Adjusted Earnings Before Interest, Tax, Depreciation and
Amortization (EBITDA) were $20.2 million, surging nearly 43% over
the prior-year quarter.
Advisory Board launched Crimson Population Risk Management under
its Crimson platform. The software tool will reportedly be offering
the best-in-business population risk analytics, combining clinical
and claims-based data.
Outlook for Calendar Year 2012
Advisory Board revised its expectation for calendar year 2012. It
expects revenue between $426 million and $432 million, up from the
previous band of $420 million to $430 million.
Adjusted EBITDA is projected at $79 million to $82 million, up from
the previous range of $77 million to $82 million.
The company raised the upper end of the earnings by 5 cents.
Adjusted earnings are now estimated between $1.20 and $1.25 per
share, up from a range of $1.20 to $1.30 per share.
Positive Estimate Revisions
Earnings estimates were revised higher following the fiscal first
quarter results. For fiscal 2013, the Zacks Consensus Estimate is
currently $1.20, up nearly 25.0% in the last 30 days as three of
six estimates were revised upward. This outlook also suggests a
year-over-year increase of 29.7% (adjusted for 2:1 stock split
effective June 18, 2012).
For fiscal 2014, the Zacks Consensus Estimate of $1.49 improved
20.2% over the last 30 days as four of seven estimates moved
upward. The current estimate also represents a year-over-year
increase of 24.2%.
Shares of Advisory Board are roughly trading at 35.4x the fiscal
2013 estimate, compared with the peer group average of 23.3x. On a
price-to-book (P/B) basis, shares are trading at 6.2x, compared to
the peer group average of 2.7x. The PEG ratio is 1.8 times.
Nonetheless, the company has a trailing 12-month ROE of 16.5%,
higher than the peer group average of 13.6%.
Founded in 1979 and headquartered in Washington, DC, Advisory Board
offers best practices research and analysis, software tools, and
management and advisory services to hospitals, health systems,
pharmaceutical and biotech companies, health care insurers, medical
device companies, colleges, universities, and other educational
With a market capitalization of $1.45 billion, the company employs
1,850 employees and competes with Accenture plc (
), Huron Consulting Group Inc. (
) and Navigant Consulting Inc. (
ADVISORY BOARD (ABCO): Free Stock Analysis
To read this article on Zacks.com click here.