Quality Systems Increases Sales but Misses Estimates on Earnings

Seth Jayson, The Motley Fool

Quality Systems (NAS: QSII) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Quality Systems beat slightly on revenues and missed on earnings per share.

Compared to the prior-year quarter, revenue increased significantly and earnings per share expanded significantly.

Gross margins expanded, operating margins increased, net margins dropped.

Revenue details
Quality Systems reported revenue of $112.8 million. The 21 analysts polled by S&P Capital IQ wanted to see a top line of $110.7 million. Sales were 23% higher than the prior-year quarter's $91.9 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
EPS came in at $0.36. The 22 earnings estimates compiled by S&P Capital IQ forecast $0.38 per share. GAAP EPS of $0.36 for Q3 were 20% higher than the prior-year quarter's $0.30 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 66.0%, 120 basis points better than the prior-year quarter. Operating margin was 28.8%, 70 basis points better than the prior-year quarter. Net margin was 18.7%, 40 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $116.1 million. On the bottom line, the average EPS estimate is $0.41.

Next year's average estimate for revenue is $434.6 million. The average EPS estimate is $1.49.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 2,116 members out of 2,180 rating the stock outperform, and 64 members rating it underperform. Among 833 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 819 give Quality Systems a green thumbs-up, and 14 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Quality Systems is outperform, with an average price target of $44.93.

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At the time thisarticle 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. Motley Fool newsletter services have recommended buying shares of Quality Systems. 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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