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Is a Beat in the Cards for ANSYS (ANSS) in Q1 Earnings?

Zacks Equity Research
·4 mins read

ANSYS, Inc. ANSS is set to report first-quarter 2020 results on May 6.

For first-quarter 2020, the company anticipates non-GAAP earnings in the range of 75 cents per share to 88 cents per share. The Zacks Consensus Estimate for first-quarter earnings is pegged at 78 cents per share, unchanged in the past 30 days. The figure indicates a decline of 39.5% from the year-ago quarter’s reported figure.

Non-GAAP revenues are anticipated between $300 million and $320 million. The Zacks Consensus Estimate for revenues is pegged at $306.8 million, which suggests a decline of 4.1% from the year-ago quarter’s figure.

Notably, the company has a trailing four-quarter positive earnings surprise of 17.6%, on average.

ANSYS, Inc. Price and EPS Surprise

 

ANSYS, Inc. Price and EPS Surprise
ANSYS, Inc. Price and EPS Surprise

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

 

Favorable ESP

Our proven model predicts an earnings beat for ANSYS this time around. The 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 has an Earnings ESP of +2.14% 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 to Consider

ANSYS is witnessing solid demand in the automotive end-market, especially for autonomous and electric vehicle solutions, which is likely to have had a positive impact on the company’s first-quarter performance.

In the first quarter, the company’s simulation solutions were adopted by AEye into its Intelligent Detection and ranging (iDAR) platform to enhance the safety of autonomous driving.

Moreover, the company’s simulation solutions are witnessing robust traction in the medical devices market, with a significant number of large deals in the previous quarter. This trend is expected to have continued in the first quarter owing to large demand for medical devices stemming from the coronavirus pandemic.

Further, ANSYS is doing well in the aerospace and defense market as well. Markedly, the company signed an eight-figure deal with a gas turbine manufacturer in the previous quarter. The momentum is likely to have continued in the first quarter due to the complex part challenges being faced by companies, which in turn is generating demand for its multi-physics portfolio.

Growing clientele is expected to have bolstered annual contract value (ACV) growth in the first quarter. Notably, the Zacks Consensus Estimate for ACV is pegged at $327 million, which indicates growth of 7.8% from the year-ago quarter’s reported figure.

Markedly, an expanding customer base is instilling confidence in the stock. Shares of ANSYS have returned 36.8% in the past year compared with the industry’s rise of 21.1%.

Moreover, strong synergies from its partnerships with Autodesk, Microsoft and Rockwell Automation is likely to have aided the company acquire more customers This, in turn, is expected to have benefited first-quarter performance.

Notably, the Zacks Consensus Estimate for Maintenance and service revenues is pegged at $200 million, which indicates growth of 7.5% from the year-ago quarter’s reported figure. However, consensus mark for Software licenses revenues is pegged at $102 million that suggests a decline of 13.6% from the year-ago quarter’s reported figure.

Increased expenditure on Research and Development (R&D) is likely to have put pressure on margins in the first quarter. Moreover, supply chain disruptions and delayed deals due to the pandemic are expected to have impacted revenues in the to-be-reported quarter.

Key Q1 Developments

ANSYS launched the ANSYS 2020 R1 platform which will speed up the digital transformation process for companies by enhancing the interfaces, functionality, workflows and scalability of the company’s products.

The company also partnered with Blackberry to support the latter’s BlackBerry QNX real-time operating system (RTOS) for connected and autonomous vehicles.

Other Stocks to Consider

Here are some other companies, which also have the right combination of elements to post an earnings beat this quarter:

Inphi Corporation IPHI has an Earnings ESP of +20.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zillow Group, Inc. ZG has an Earnings ESP of +1.65% and a Zacks Rank #2.

Universal Display Corporation OLED has an Earnings ESP of +15.90% and a Zacks Rank #3.

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