In the most recently published quarter, the company's adjusted 45-cent earnings per share were up one cent from the Zacks consensus estimate. PTC beat the Zacks consensus estimates over the last four quarters, with surprising average earnings of nearly 7%.
In addition, non-GAAP revenues of $ 322 million were in line with the Zacks consensus estimate. This figure increased by almost 5% compared to the same quarter of the previous year.
PTC expects revenues of between $ 270 million and $ 285 million for the first quarter of fiscal 2019, and adjusted earnings (per ASC 605) of between 37 and 42 cents per share.
Zacks' estimated consensus revenue for the first quarter is $ 324.7 million, which represents a 5.9% year-over-year growth. In addition, the consensus profit margin remained at 41 cents in the last seven days.
Let's see how things stand before this announcement.
Solid bookings and recurring revenue: key enablers
PTC's high end should benefit from strong CAD and industrial IoT bookings. Notably, IoT accounted for 25% of the company's bookings in 2018. In fact, management expects IoT to become its second source of bookings in 2019.
The company benefits from its partnership with Rockwell Automation. During the quarter, PTC and Rockwell Automation launched FactoryTalk InnovationSuite. The solution is supported by PTC's ThingWorx Industrial IOT Platform, which includes Kepware's industrial connectivity, and Vuforia's Augmented Reality (AR) solution.
The company also launched the KEPServerEX Version 6.6 industrial connectivity platform, which strengthens Kepware's leading position in the CNC (computer numerically controlled) and injection molding machine (IMM) market. The latter solution helps manufacturers accelerate their digital transformation initiatives.
PTC also acquired Frustum for approximately $ 70 million during the quarter. Frustum uses artificial intelligence to generate design options. Its technology makes the design process faster and innovative. The acquisition reinforces PTC's Creo portfolio offerings.
In addition, the increase in recurring software revenue (90% in the last quarter) is a positive factor. The transition from the perpetual license model to the commercial subscription model is also expected to lead to recurring revenue growth.
PTC's ThingWorx continues to grow rapidly in popularity. In addition, the partnership with Microsoft (MSFT – Free Report) that combines ThingWorx and Azure IoT helps PTC win new contracts in the Smart Connected Products (SCP) market.
What our model says
According to the Zacks model, a firm with a Zacks rank 1 ranking (strong buy), 2 (buy) or 3 (hold) with a positive profit ESP is likely to exceed estimates. It is best to avoid ranked actions (Zacks Rank # 4 or 5).
PTC has a Zacks No. 3 ranking and a profit ESP of 0.00%. You can discover the best shares to buy or sell, before they are declared, with our earnings ESP filter.
Stocks to consider
Here are some actions to take into consideration because our proven model shows that they have the right combination of items to generate a higher profit this quarter.
Twitter (TWTR – Free Report) has a profit ESP of + 26.55% and a rank of Zacks # 1. You can see the full list of Tier 1 stocks of today's Zacks here.
Grubhub (GRUB – Free Report) has a profit ESP of + 21.07% and a ranking of Zacks # 3.
Top 10 stocks of Zacks for 2019
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