Why Mentor Graphics' Shares Popped

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 electronic design company Mentor Graphics jumped as much as 11% in early trading after announcing earnings.

So what: Revenue rose 5% to $253.2 million and adjusted earnings per share were up 24% to $0.26. Analysts were only expecting $244.9 million in revenue and earnings of $0.17 per share so the company easily beat the bar Wall Street had set.

Management also announced an increase to its share repurchase authorization, which now stands at $100 million and will pay a $0.045 per share quarterly dividend.

Now what: New innovations are driving the company's results and management was confident that would continue during the ramp of emulation production. The outlook for full-year revenue was kept at $1.155 billion in revenue but non-GAAP earnings per share guidance was increased to $1.59. The company's forward P/E ratio of 13 is fairly low given the earnings growth and I think the value and operational momentum will push the stock higher.

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The article Why Mentor Graphics' Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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