What Happened?

A number of stocks jumped in the morning session after cooler-than-expected inflation data ignited investor optimism for a potential Federal Reserve interest rate cut. The July Consumer Price Index (CPI) report, an important measure of inflation, came in cooler than expected, showing prices holding steady at an annual rate of 2.7%. This data has led to speculation that the Federal Reserve might lower interest rates. For growth-focused sectors like SaaS, lower interest rates are particularly beneficial as they increase the present value of companies' future earnings, making their stocks more appealing.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Vertical Software company Alarm.com (NASDAQ: ALRM) jumped 3%. Is now the time to buy Alarm.com? Access our full analysis report here, it’s free.
• Vertical Software company Manhattan Associates (NASDAQ: MANH) jumped 3.7%. Is now the time to buy Manhattan Associates? Access our full analysis report here, it’s free.

Zooming In On Manhattan Associates (MANH)

Manhattan Associates’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 20 days ago when the stock gained 8% on the news that the company reported second-quarter results that beat analyst expectations and raised its full-year guidance. The company announced adjusted earnings per share of $1.31 on revenue of $272.4 million for the quarter. These figures surpassed Wall Street's consensus estimates, which had predicted earnings of $1.13 per share on $263.6 million in revenue. 

A key driver of the strong performance was a 22% year-over-year increase in cloud subscription revenue. The company also reported that its remaining performance obligations (RPO), a metric indicating future revenue under contract, grew by 26% and surpassed the $2 billion mark. Following the strong quarter, Manhattan Associates lifted its financial forecast for the full year. It now expected adjusted earnings per share to be between $4.76 and $4.84, up from a previous forecast. The company also raised its full-year revenue guidance to a range of $1.071 billion to $1.075 billion. This positive "beat and raise" report signaled strong demand for its supply chain solutions, even in a challenging economic environment.

Manhattan Associates is down 21.2% since the beginning of the year, and at $211.86 per share, it is trading 31.6% below its 52-week high of $309.78 from December 2024. Investors who bought $1,000 worth of Manhattan Associates’s shares 5 years ago would now be looking at an investment worth $2,286.

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