Why Tangoe's Shares Did a Victory Dance

Alex Planes, The Motley Fool
Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tangoe (NAS: TNGO) finished up more than 12% after an early gain of over 10% today, following a third-quarter earnings report that beat the Street's EPS expectations.

So what: Tangoe's third-quarter adjusted EPS, at $0.13, was a good deal better than the $0.09 analysts had expected. Going forward, the company's full-year EPS guidance also beats the Street's expectations, with a narrow $0.48 to $0.49 range easily clearing the $0.46 EPS bar set by analysts for 2012. Tangoe also released full-year revenue guidance today for 2013, and the $188 million to $191 million range hit the sweet spot of the consensus $189.3 million analysts had projected.


Now what: Although Tangoe is unprofitable on a GAAP basis, its free cash flow has been on the rise for some time. However, earlier trailing 12-month FCF results put Tangoe's P/FCF at a rather high 40.8. Tangoe is clearly improving its business, and its stock remains well below heights reached this summer. Does that make Tangoe a bargain now that forward momentum appears to be picking up? It's quite possible, but I'd like to see more specificity on 2013's bottom-line guidance before jumping in.

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The article Why Tangoe's Shares Did a Victory Dance originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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