Have you been paying attention to shares of Bottomline Technologies (EPAY)? Shares have been on the move with the stock up 17.5% over the past month. The stock hit a new 52-week high of $66.03 in the previous session. Bottomline Technologies has gained 88.4% since the start of the year compared to the 13.4% move for the Zacks Computer and Technology sector and the 27.3% return for the Zacks Computer - Software industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 9, 2018, Bottomline Technologies reported EPS of $0.35 versus consensus estimate of $0.29 while it beat the consensus revenue estimate by 5.33%.
For the current fiscal year, Bottomline Technologies is expected to post earnings of $0.73 per share on $429.78 million in revenues. This represents a 14.17% change in EPS on a 9.05% change in revenues. For the next fiscal year, the company is expected to earn $0.93 per share on $478.38 million in revenues. This represents a year-over-year change of 16.9% and 11.31%, respectively.
Bottomline Technologies may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Bottomline Technologies has a Value Score of F. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 90.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 34X versus its peer group's average of 32.1X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Bottomline Technologies currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Bottomline Technologies fits the bill. Thus, it seems as though Bottomline Technologies shares could have a bit more room to run in the near term.
How Does Bottomline Technologies Stack Up to the Competition?
Shares of Bottomline Technologies have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Avid Technology (AVID), Magic Software Enterprises (MGIC), and Cadence Design Systems (CDNS), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Bottomline Technologies, even beyond its own solid fundamental situation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bottomline Technologies, Inc. (EPAY): Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report Magic Software Enterprises Ltd. (MGIC): Free Stock Analysis Report Avid Technology, Inc. (AVID): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research