Lender Processing Services Beats Expectations but Takes a Step Back Anyway

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Lender Processing Services (NYS: LPS) reported earnings on May 4. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Lender Processing Services met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped and GAAP earnings per share dropped.


Margins dropped across the board.

Revenue details
Lender Processing Services booked revenue of $506.0 million. The eight analysts polled by S&P Capital IQ expected to see sales of $502.0 million on the same basis. GAAP reported sales were 5.8% lower than the prior-year quarter's $537.2 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.59. The eight earnings estimates compiled by S&P Capital IQ forecast $0.57 per share. GAAP EPS of $0.56 for Q1 were 11% lower than the prior-year quarter's $0.63 per share. (The prior-year quarter included -$0.04 per share in earnings from discontinued operations.)

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 23.4%, 500 basis points worse than the prior-year quarter. Operating margin was 18.6%, 550 basis points worse than the prior-year quarter. Net margin was 9.3%, 110 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $504.7 million. On the bottom line, the average EPS estimate is $0.59.

Next year's average estimate for revenue is $2.01 billion. The average EPS estimate is $2.38.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 92 members out of 119 rating the stock outperform, and 27 members rating it underperform. Among 24 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 18 give Lender Processing Services a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Lender Processing Services is hold, with an average price target of $22.57.

Over the decades, small-cap stocks, like Lender Processing Services have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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