Have you been paying attention to shares of Upland Software (UPLD)? Shares have been on the move with the stock up 4.7% over the past month. The stock hit a new 52-week high of $47.37 in the previous session. Upland Software has gained 67.8% since the start of the year compared to the 24.2% move for the Zacks Computer and Technology sector and the 28.7% return for the Zacks Internet - Software industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 7, 2019, Upland Software reported EPS of $0.58 versus consensus estimate of $0.48.
For the current fiscal year, Upland Software is expected to post earnings of $1.99 per share on $204.32 million in revenues. This represents a 17.06% change in EPS on a 36.32% change in revenues. For the next fiscal year, the company is expected to earn $1.97 per share on $206.43 million in revenues. This represents a year-over-year change of -0.75% and 1.03%, respectively.
Upland Software may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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.
Upland Software has a Value Score of D. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 23X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20.4X versus its peer group's average of 31.6X. Additionally, the stock has a PEG ratio of 1.15. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Upland Software 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 (Buy) and Style Scores of A or B, it looks as if Upland Software meets the list of requirements. Thus, it seems as though Upland Software shares could have a bit more room to run in the near term.
How Does Upland Software Stack Up to the Competition?
Shares of Upland Software 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 looking good, including eGain (EGAN), i3 Verticals (IIIV), and j2 Global (JCOM), 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 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Upland Software, even beyond its own solid fundamental situation.
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