DST Systems Beats on EPS but GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

DST Systems (NYS: DST) reported earnings on Feb. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), DST Systems missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved and GAAP earnings per share contracted significantly.

Margins shrank across the board.

Revenue details
DST Systems logged revenue of $457.3 million. The five analysts polled by S&P Capital IQ predicted sales of $466.9 million. Sales were 7.4% higher than the prior-year quarter's $424.9 million.

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

EPS details
Non-GAAP EPS came in at $1.05. The four earnings estimates compiled by S&P Capital IQ predicted $0.96 per share on the same basis. GAAP EPS of $0.93 for Q4 were 54% lower than the prior-year quarter's $2.00 per share.

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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 15.2%, 790 basis points worse than the prior-year quarter. Operating margin was 9.4%, 150 basis points worse than the prior-year quarter. Net margin was 6.7%, 940 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $520.0 million. On the bottom line, the average EPS estimate is $1.03.

Next year's average estimate for revenue is $1.91 billion. The average EPS estimate is $4.09.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 110 members out of 117 rating the stock outperform, and seven members rating it underperform. Among 37 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 36 give DST Systems a green thumbs-up, and one gives it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on DST Systems is hold, with an average price target of $54.25.

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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. 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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