Why Websense Shares Bounced

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 Websense were looking sensible today, jumping as much as 17% after beating earnings estimates in its quarterly report.

So what: The online security-solutions providers said that revenue actually declined slightly in the quarter, falling 1.8%, though gross billings, a leading indicator for revenues, climbed 1.5% to a first-quarter record $81.8 million. More importantly, adjusted earnings of $0.20 topped analyst estimates at $0.17, though that was down from $0.36 a year ago, as Websense had additional operating expenses related to expanding its sales force. CEO John McCormack noted the strength of the company's Triton solutions, which grew 11.6% and represented a majority of billings.

Now what: There were some positive signs in this report, including the earnings beat, growth in Triton revenue, and a 19% increase in transactions over $100,000. Still, revenue slid, and Websense's outlook was in line with analyst estimates, meaning that the bulk of today's gain seems to have come from just a $0.03 earnings beat. Some investors seem to believe Websense could be an acquisition target, but with a forward P/E of more than 20 and declining sales, the price could be a little high now.

Get more on Websense. Add the company to your Watchlist here.

The article Why Websense Shares Bounced originally appeared on Fool.com.

Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.