DST Systems Earnings Preview

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Investors never know what to expect for DST Systems (NYS: DST) , as it has wavered between topping and missing analysts estimates during the past fiscal year. The company will unveil its latest earnings on Tuesday, February 7. DST Systems provides sophisticated information processing and computer software services and products to the financial services industry mutual funds and investment managers, healthcare industry, telecommunications industry, and service industries.

What analysts say:

  • Buy, sell, or hold?: Analysts are bullish on DST Systems as two analysts rate it as a buy and only one analyst rates it as a sell. Analysts like DST Systems better than competitor Advent Software overall.
  • Revenue Forecasts: On average, analysts predict $436.8 million in revenue this quarter. That would represent a rise of 2.8% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.96 per share. Estimates range from $0.89 to $1.02.

What our community says:
CAPS All-Stars are in strong support of the stock, with 97.4% assigning it an "outperform" rating. The greater community is in line with the All-Stars, as 94% give it a rating of "outperform." Fools feel positively about DST Systems, though the message boards have been quiet lately with only 38 posts in the past 30 days. DST Systems has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
DST Systems' income has fallen year-over-year by an average of 12% over the past five quarters. The company's gross margin shrank by three percentage points in the last quarter. Revenue rose 4.3% while cost of sales rose 8.1% to $496.5 million from a year earlier.

Now let's look at how efficient management is at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. DST Systems' gross margins, which reflect the total sales revenue retained after costs, have been dropping year-over-year for the last four quarters. See how DST Systems has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

16%

18%

16.8%

16.5%

Operating Margin

10.3%

12.6%

11.7%

10.3%

Net Margin

6%

9.5%

9%

16.1%

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Earnings estimates provided by Zacks.

At the time this article was published

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