Ultimate Software Group Hits Estimates in Solid Quarter

Seth Jayson, The Motley Fool
Updated

Ultimate Software Group (NAS: ULTI) reported earnings on Feb. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Ultimate Software Group met expectations on revenues and earnings per share.

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

Margins grew across the board.

Revenue details
Ultimate Software Group chalked up revenue of $72.7 million. The 16 analysts polled by S&P Capital IQ predicted sales of $72.1 million. Sales were 20% higher than the prior-year quarter's $60.4 million.

anImage
anImage

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

EPS details
Non-GAAP EPS came in at $0.24. The 16 earnings estimates compiled by S&P Capital IQ predicted $0.24 per share on the same basis. GAAP EPS of $0.07 for Q4 were 40% higher than the prior-year quarter's $0.05 per share.

anImage
anImage

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 58.6%, 190 basis points better than the prior-year quarter. Operating margin was 10.7%, 290 basis points better than the prior-year quarter. Net margin was 2.7%, 30 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $75.9 million. On the bottom line, the average EPS estimate is $0.12.

Next year's average estimate for revenue is $329.9 million. The average EPS estimate is $1.02.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 81 members out of 112 rating the stock outperform, and 31 members rating it underperform. Among 39 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 25 give Ultimate Software Group 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 Ultimate Software Group is outperform, with an average price target of $63.42.

Over the decades, small-cap stocks like Ultimate Software Group have produced 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: 2 Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement