The Ukraine-Russia war and the Fed's impending interest rate increases have driven a massive tech sell-off. However, continuing remote working trends have heightened demand for software services in almost every industry. In addition, the growing adoption of advanced technologies, such as blockchain and artificial intelligence, and increasing investments by businesses to make their operations efficient should also help the sector thrive.
Furthermore, the developing metaverse, rapid business automation, and rising demand for data analytics could bolster the demand for software services. According to Gartner, software spending is expected to grow 9.8% to $674.9 billion in 2022.
Given the industry's promising prospects, we think it could be wise to bet on the stocks of fundamentally sound companies Amdocs Limited (DOX), Sapiens International Corporation N.V. (SPNS), Commvault Systems, Inc. (CVLT), Progress Software Corporation (PRGS), and American Software, Inc. (AMSWA). These stocks are also rated a "Strong Buy" in our POWR Ratings system.
Amdocs Limited (DOX)
Headquartered in Chesterfield, Mo., DOX and its subsidiaries provide software and services worldwide. The company designs, develops, operates, implements, supports, and markets open and modular cloud portfolios.
Last month, DOX agreed to acquire MYCOM OSI, a U.K.-headquartered company that provides SaaS-based cloud network and service assurance solutions to communications service providers globally. The acquisition will augment DOX's network portfolio to include end-to-end service and network orchestration by bringing key assurance capabilities to power the next generation of networks. MYCOM OSI's award-winning service assurance suite comprises performance management, fault management, and service quality management, leveraging artificial intelligence (AI) and machine learning (ML) to detect and predict anomalies and enable intent-driven closed-loop operations through automated remediation and AIOps.
Also, last month DOX was selected by VodafoneZiggo to deliver a wide-ranging transformation that unlocks new growth capabilities for the Dutch telecoms operator. Under this transformation, based on the DOX's Commerce and Care suite, VodafoneZiggo's fixed-line and mobile customers will experience a combined user journey across all lines of business. The project will emphasize self-service enablement and ensure shorter average handling times. Moreover, VodafoneZiggo will benefit from reduced time to market operationally and cost savings.
In the second quarter, ending March 31, 2022, DOX's total revenue increased 9.2% year-over-year to $1.15 billion. Its non-GAAP operating income grew 9.1% from its year-ago value to $201.63 million, while its non-GAAP net income amounted to $190.94 million, up 28.9% from its year-ago value. The company's non-GAAP EPS rose 36.3% from its prior-year quarter to $1.54.
The $1.27 consensus EPS estimate for the third quarter, ending Sept. 30, 2022, represents 10.1% year-over-year growth. Analysts expect its revenue to increase 8.8% year-over-year to $1.16 billion for the third quarter, ending June 30, 2022. Furthermore, DOX has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 16.2% in price year-to-date and 23.7% over the past six months.
DOX's POWR Ratings reflect this promising outlook. The company has an overall A rating. Which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
DOX is also rated B for Quality and Stability. Within the C-rated Software - Business industry, it is ranked #1 of 157 stocks.
To see additional POWR Ratings for Momentum, Value, Growth, and Sentiment for DOX, Click here.
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Sapiens International Corporation N.V. (SPNS)
SPNS in Holon, Israel, sells software solutions for the insurance and financial services industries internationally. The company offers Sapiens CoreSuite and Sapiens IDITSuite for personal, commercial, and specialty lines; and Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster for life, pension, and annuities.
Recently, SPNS announced a partnership with Mindtree, a global technology consulting and services company, to help assist digital transformation through the insurance industry. The combination of SPNS' industry-leading, cloud-native, core suite of insurance applications and Mindtree's deep insurance domain knowledge and extensive delivery capabilities should accelerate the scale, speed to market, and customer satisfaction as insurance companies embrace digital.
Also, in March, SPNS agreed with Albany Group, which has expertise in risk and intelligence software, to produce automated compliance, risk management, and regulatory platforms that provide a comprehensive third-party supply chain management solution. The partnership eases complex compliance processes across third-party platforms such as Lloyd's to meet stringent industry and regulatory requirements with efficacy at reduced costs and minimal risk.
For the first quarter, ending March 31, 2022, SPNS' non-GAAP revenue increased 6.8% year-over-year to $117.70 million. The non-GAAP operating income grew 9.3% from its year-ago value to $20.80 million, while its net income improved 16% from its prior-year quarter to $17.30 million. The company's non-GAAP EPS rose 14.8% year-over-year to $0.31.
The $0.30 consensus EPS estimate for the second quarter, ending June 30, 2022, represents a 1.9% improvement year-over-year. Analysts expect its revenue to increase 7.7% year-over-year to $123.25 million for the second quarter, ending June 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock gained 9% in price over the past month.
SPNS' strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. SPNS is also rated a B grade for Growth, Value, and Sentiment. Within the Software - Business industry, it is ranked #3.
In total, we rate SPNS on eight distinct levels. To see SPNS' additional POWR Ratings for Momentum, Quality, and Stability, Click here.
Commvault Systems, Inc. (CVLT)
Headquartered in Tinton Falls, N.J., CVLT offers data protection and information management software applications and related services internationally. The company offers Commvault Backup and Recovery, a backup and recovery solution; Commvault Disaster Recovery, an easy-to-use replication, and disaster recovery solution; and Commvault Complete Data Protection, an easy-to-use data protection solution.
This year, CVLT is rolling out its Metallic Data Management as a Service (DMaaS) solutions in Qatar. Metallic's enterprise-grade portfolio comprises cloud-based solutions for safeguarding a broad range of workloads from SaaS applications like Office 365 to VMs and containers, enterprise databases, endpoints, etc.
Also, in February, CVLT announced the general availability for Feature Release 11.26. These improvements to CVLT's best-in-class Intelligent Data Services aid in hardening infrastructure against the attack and improve recoverability, continuing CVLT's commitment to reducing cyber threats—including ransomware—in any infrastructure: on-premises, in the cloud, and even across multiple clouds.
CVLT's revenues increased 7.6% year-over-year to $205.95 million for the fourth quarter, ending March 31, 2022. Its income from operations grew 10.7% from its year-ago value to $11.45 million, while its net income improved 27.6% from its prior-year quarter to $8.00 million. The company's EPS amounted to $0.17, up 30.8% year-over-year.
The $0.63 consensus EPS estimate for the first quarter, ending June 30, 2022, represents 2.3% year-over-year growth. Analysts expect its revenue to increase 6.5% year-over-year to $195.26 million for the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
It is no surprise that CVLT has an overall A rating, which equates to Strong Buy in our POWR Ratings system. CVLT has an A grade for Quality and a B grade for Value and Growth. In the F-rated Software - Application industry, it is ranked #1 of 156 stocks
Click here to see the additional POWR Ratings for CVLT (Stability, Momentum, and Sentiment).
Progress Software Corporation (PRGS)
PRGS develops, deploys, and manages business applications. The Bedford, Mass., company offers OpenEdge, a development software, which builds multi-language applications for secure deployment across various platforms and devices, as well as cloud; developer tools that comprise components for user interface development for Web, mobile, desktop, chat, and AR/VR apps, as well as automated application testing and reporting tools.
Last month, PRGS announced the day-zero support for .NET MAUI General Availability and the official release of Progress Telerik UI for .NET MAUI, the most comprehensive library of UI components for the newest Microsoft app development framework. The expansion of its widely-used portfolio for .NET UI development should enable Progress to empower developers to build native applications across devices and operating systems—Android, iOS, Windows, and macOS, with speed and scale.
Also last month, PRGS announced the release of Progress Chef Cloud Security, extending DevSecOps with compliance support for native cloud assets. This should enable end-to-end management of all on-premises, cloud, and native cloud resources. This new offering is coupled with new capabilities across the Chef portfolio, targeting DevOps success in the most demanding and difficult enterprise deployments. During the first quarter, ending Feb. 28, 2022, PRGS' non-GAAP revenue increased 12% year-over-year to $147.51 million. Its non-GAAP income from operations grew 4% from its year-ago value to $58.73 million. Its non-GAAP net income amounted to $43.56 million, up 2% from its prior-year quarter. And the company's non-GAAP EPS rose 2% from its previous period to $0.97.
Analysts expect PRGS' revenue to increase 13.4% year-over-year to $146.45 million for the second quarter, ending May 31, 2022. The $0.95 consensus EPS estimate for the second quarter, ending May 31, 2022, represents a 15.9% improvement year-over-year. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The company's shares have soared 8.4% in price over the past year and 9.6% over the past three months.
PRGS' strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Quality and a B for Growth and Value. Within the Software - Application industry, it is ranked #3.
In total, we rate PRGS on eight distinct levels. Beyond what we have stated above, we have also given PRGS grades for Sentiment, Stability, and Momentum. Get all the PRGS ratings here.
American Software, Inc. (AMSWA)
Headquartered in Atlanta, Ga., AMSWA develops, markets, and supports a range of computer business application software products internationally. It has three operational segments: Supply Chain Management (SCM); Information Technology Consulting (IT Consulting); and Other.
In the third quarter, ending Jan. 31, 2022, AMSWA's total revenues increased 17% year-over-year to $32.42 million. Its non-GAAP operating earnings grew 153% from its year-ago value to $4.39 million, while its adjusted earnings improved 28% from its prior-year quarter to $3.83 million. The company's EPS rose 22% year-over-year to $0.11.
The $0.43 consensus EPS estimate for its fiscal year 2022 represents 28.8% year-over-year growth. Analysts expect its revenue to increase 9.6% year-over-year to $31.30 million for the fourth quarter, ending April 30, 2022.
It is no surprise that AMSWA has an overall A rating, which equates to Strong Buy in our POWR Ratings system. AMSWA has an A grade for Sentiment and a B grade for Quality and Stability. In the Software - Application industry, it is ranked #7.
Click here to see the additional POWR Ratings for AMSWA (Growth, Momentum, and Value).
DOX shares were trading at $86.58 per share on Wednesday morning, down $0.31 (-0.36%). Year-to-date, DOX has gained 16.23%, versus a -13.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.5 Software Stocks Rated 'Strong-Buy' For June 2022 appeared first on StockNews.com