Bottomline Technologies (EPAY) Soars to a 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Bottomline Technologies EPAY? Shares have been on the move with the stock up 12.7% over the past month. EPAY hit a new 52-week high of $50.01 in the previous session. Bottomline Technologies has gained 44.1% since the start of the year compared to the 9.6% move for the Computer and Technology sector and the 18.5% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 3, 2018, Bottomline Technologies reported EPS of $0.3 versus the Zacks Consensus Estimate of $0.25 while it beat the consensus revenue estimate by 4.69%.
For the current fiscal year, Bottomline Technologies is expected to post earnings of $1.21 per share on $388.75 million in revenues. This represents a 22.22% change in EPS on a 11.26% change in revenues. For the next fiscal year, the company is expected to earn $1.43 per share on $424.64 million in revenues. This represents a year-over-year change of 18.18% and 9.23%, respectively.
Valuation Metrics
Bottomline Technologies may be at a 52-week high right now, but what might the future hold for EPAY? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb 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 D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 41.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 25.6X versus its peer group's average of 25X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Bottomline Technologies, Inc. Price and Consensus
Bottomline Technologies, Inc. Price and Consensus | Bottomline Technologies, Inc. Quote
Zacks Rank
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 and Style Scores of A or B, it looks as if Bottomline Technologies passes the test. Thus, it seems as though EPAY shares could still be poised for more gains ahead.
How Does Bottomline Technologies Stack Up to the Competition?
Shares of Bottomline Technologies have been soaring, 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 Citrix Systems CTXS, SAP SE SAP, and Intuit INTU, 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 25% of all the industries we have in our universe, so it looks like there are some nice tailwinds for EPAY, even beyond its own solid fundamental situation.
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