U.S. markets open in 1 hour 26 minutes

Will ANSYS (ANSS) Retain Its Beat Streak in Q4 Earnings?

Zacks Equity Research

ANSYS, Inc. ANSS is set to report fourth-quarter 2019 results on Feb 26.

For fourth-quarter 2019, the company anticipates non-GAAP earnings in the range of $1.87 per share to $2.05 per share. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.99 per share, unchanged over the last 30 days. The figure indicates a decline of 6.6% from the year-ago reported figure.

Non-GAAP revenues are anticipated between $454.1 million and $479.1 million. The Zacks Consensus Estimate for revenues stands at $466.97 million, suggesting growth of 11.7% from the year-ago quarter.

Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters by 25.17%, on average.

Here’s What the Zacks Model Suggests

Our proven model predicts an earnings beat for ANSYS time around. According to the Zacks model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
 

ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. price-eps-surprise | ANSYS, Inc. Quote

ANSYS has an Earnings ESP of +2.01% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Likely to Have Influenced Q4 Results

ANSYS is witnessing robust demand for simulation software solutions particularly from automotive end-market, which is likely to have driven the to-be-reported quarter’s performance.

In fact, the company recently announced that its simulation solutions will be utilized in Porsche's first-ever fully electric race car, the Porsche 99X Electric, to design sturdy electric powertrain and enhance energy efficiency.

Growing clientele is expected to have bolstered annual contract value (ACV) growth in the fourth quarter. Notably, the Zacks Consensus Estimate for ACV is pegged at $533 million, indicating growth of 10.9% from the year-ago reported figure.

Markedly, an expanding customer base is instilling confidence in the stock. Shares of ANSYS have returned 64.1% in the past year, significantly outperforming the industry’s rally of 41%.



Moreover, ANSYS is expected to have secured deal wins on the back of robust partnership with PTC. In the third quarter, PTC closed 126 deals, up 66% sequentially. This, in turn, is expected to have benefited fourth-quarter performance.

Synergies from ANSYS’ strategic acquisitions, including Granta Design and Helic buyouts, are expected to have positively impacted the quarter to be reported.

Notably, the Zacks Consensus Estimate for Maintenance and service revenues is pegged at $209 million, indicating growth of 10.6% from the year-ago reported figure. Meanwhile, consensus for Software Licenses revenues stands at $251 million, suggesting an improvement of 10.9% from the year-ago quarter.

Noteworthy Developments in Q4

During the quarter under review, ANSYS announced collaboration with Microsoft. Per the deal, Microsoft Azure Digital Twins will utilize ANSYS Twin Builder to facilitate mutual customers to effectively improve operations and eliminate unscheduled downtime expenses, and accelerate time to market.

ANSYS also expanded partnership with Autodesk, by which ANSYS Mechanical simulation solutions will be integrated with Autodesk Fusion 360, to aid customers reduce time to market.

Further, in the fourth quarter, ANSYS acquired Dynardo, engaged in providing simulation-based process integration and design optimization (PIDO) technology. The buyout is expected to enhance ANSYS Minerva solution and aid the company in delivering a comprehensive suite of PIDO-based robust design solutions.

The company also closed acquisition of Livermore Software Technology Corporation, aimed at strengthening its explicit dynamics suite and finite element analysis capabilities.

Although both the buyouts are expected to be immediately accretive to revenues, growing expenses associated with acquisitions and product development, are likely to have limited margin expansion in the fourth quarter.

Other Stocks that Warrant a Look

Here are some other stocks that you may consider, as our proven model shows that these too have the right combination of elements to post an earnings beat this quarter.

Berry Petroleum Corporation BRY has an Earnings ESP of +5.00% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Benefitfocus, Inc. BNFT has an Earnings ESP of +35.48% and a Zacks Rank of 2.

BMC Stock Holdings, Inc. BMCH has an Earnings ESP of +7.04% and a Zacks Rank of 2.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>