Supply chain management firm American Software is expected to report lower profits and slowing growth when it posts earnings next Wednesday, as it pursues its strategy of getting existing clients to spend more.
The Atlanta-based company is expected to post first-quarter revenues of $28.2m in the quarter ended July 30, a year over year rise of 3.1%, according to Zacks consensus estimate. However, its earnings per share is expected to fall 16.7% over the period to $0.05.
That would be a much slower growth as compared to the previous quarter where the company’s revenues increased by 11.4%
Can the firm climb up the supply chain?
American Software is working to increase the share of recurring revenue stream of maintenance and cloud services. It expects the share of recurring revenues to rise to 60% by the end of the year as compared to 57% in fiscal fourth quarter 2020.
During the fiscal fourth quarter 2020 earnings call, American Software’s chief executive Allan Dow sounded optimistic about the company’s long term outlook. “What we’ve seen already is that managing the supply chain has risen to the executive agenda,” said Dow.
He added: “There is an awareness that current systems and processes are insufficient for today’s market where resiliency, speed, and agility go hand in hand and have become the norm. This speaks well to our comprehensive planning platform, prescriptive implementation approach, and having robust capabilities built in. These conditions bode well for our growth in fiscal 2021 and beyond.”
Analysts see the stock poised for high growth
American Software Shares are up 17% for the year, underperforming the Nasdaq Index that’s up more than 25%. Shares bottomed at $9.05 in March and made a 52-week high of $21.48 in June. Based on yesterday’s closing prices, American Software stock is down 19.3% from its 52-week highs.
The average price target of American Software stock is $21.50, a premium of 24% over current prices, according to Yahoo Finance. The stock trades at a next 12-month price to earnings multiple of 46.7times.
You can buy American Software stock through any of the best online stockbrokers. Alternatively, if you wish to trade derivatives, we also have reviewed a list of derivative brokers you can consider.
