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Strength Seen in SecureWorks (SCWX): Can Its 12.2% Jump Turn into More Strength?

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SecureWorks SCWX shares rallied 12.2% in the last trading session to close at $16.47. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 10.6% gain over the past four weeks.

The upswing came after SecureWorks reported better-than-expected first-quarter results and raised outlook for full-fiscal 2022. The company posted non-GAAP earnings of $0.05 per share that compared favorably with the Zacks Consensus Estimate of loss of $0.04. Also, quarterly earnings jumped 66.7% year over year.

SecureWork’s quarterly revenues of $139.5 million surpassed the Zacks Consensus Estimate of $135.3 million. However, the top-line figure declined 1.2% from the year-ago quarter.

Buoyed by better-than-expected first-quarter performance, the company raised its fiscal 2022 sales outlook to $540-$550 million from the $535-$545 million projected earlier. It also lowered its fiscal 2022 non-GAAP loss per share guidance range to $0.04-$0.13 cents per share from $0.22-$0.31 cents per share, expected previously.

This information security services provider is expected to post quarterly loss of $0.07 per share in second-quarter fiscal 2022, which represents a year-over-year change of -170%. Revenues are expected to be $131.13 million, down 5.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For SecureWorks, the consensus EPS estimate for the second quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SCWX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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