Solera Holdings Earnings Preview

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Solera Holdings (NYS: SLH) came in right in line with the Street's expectations last quarter, but investors are hoping that it will beat them this quarter. The company will unveil its latest earnings on Tuesday. Solera Holdings is a global provider of software and services to the automobile insurance claims processing industry.

What analysts say:

  • Buy, sell, or hold?: Half of analysts think investors should stand pat on Solera Holdings while the remaining half rate the stock as a buy. Analysts' rating of Solera Holdings has stayed constant from three months prior.
  • Revenue forecasts: On average, analysts predict $195.5 million in revenue this quarter. That would represent a rise of 16.3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.65 per share. Estimates range from $0.63 to $0.66.

What our community says:
Most CAPS All-Stars (63.2%) are assigning Solera an outperform rating. The majority of Fools (76.3%) agree with the All-Stars and award it an outperform rating. Fools feel positively about Solera Holdings, though the message boards have been quiet lately with only 32 posts in the past 30 days. Solera Holdings' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Solera Holdings' profit has risen year-over-year by an average of 71.9% over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 2.2 percentage points in the last quarter. Revenue rose 25% while cost of sales rose 34.3% to $62.7 million from a year earlier.

Now let's get some insight into how efficient management is at running the business. Margins are a representation of how efficiently a company captures portions of sales dollars. Solera Holdings saw a decrease in its net margins in the last two quarters year-over-year. Net margins reflect what percentage of each dollar earned by the company becomes profit. Here are Solera Holdings' reported margins for the last four quarters:

Quarter

Q1

Q4

Q3

Q2

Gross Margin

68.5%

69.5%

71.2%

69.7%

Operating Margin

24.0%

34.7%

27.5%

24.8%

Net Margin

15.7%

9.5%

45.6%

18.4%

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Earnings estimates provided by Zacks.

At the time this article was published

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