Because almost all industries are now undergoing a digital transformation, and enterprises are pressing on with remote working structures, the demand for advanced software solutions is rising.
Moreover, growing interest in big data, machine learning, and artificial intelligence makes the industry’s prospects bright. Indeed, the global software market is expected to grow at a 7.2% CAGR to $823.71 billion by 2026.
Therefore, we believe fundamentally sound software stocks National Instruments Corporation (NATI), Commvault Systems, Inc. (CVLT), Progress Software Corporation (PRGS), and American Software, Inc. (AMSWA) could be solid bets to cash in on the industry tailwinds. Further, our proprietary POWR Ratings system has recommended these stocks as a ‘Strong Buy’ or ‘Buy.’
National Instruments Corporation (NATI)
NATI in Austin, Tex., provides a software-centric platform and systems to engineers and scientists worldwide. The company provides flexible application software and modular hardware to support organizations creating computer-based measurement and automation systems. It serves the semiconductor, transportation, aerospace and defense industries, and government agencies.
On September 7, 2021, NATI collaborated with EA Elektro-Automatik (EA) GmbH & Co. KG, Germany’s leading manufacturer of high-performance power supplies and electronic loads, to offer bidirectional power supplies that support battery cycling and power-level tests for electric vehicles (EVs). EA’s power supplies will be integrated into NATI’s software-connected toolchain to optimize battery test workflows. This accelerates the path to zero emissions by shortening time to market and improving safety and performance throughout the life cycle of the battery.
On July 27, 2021, NATI collaborated with Seagate Technology Holdings plc (STX), a data storage and infrastructure solutions provider, to enhance data storage and transfer services, including a first-of-its-kind advanced driver-assistance system (ADAS) record offering. Because the latest autonomous vehicles require more real road data, the new ADAS record offering, which combines NATI’s high-performance in-vehicle data logging systems with STX’s data transfer and edge storage services, enables OEMs and suppliers to efficiently leverage data to ensure safety and reliability.
For its fiscal second quarter, ended June 30, 2021, NATI’s net sales increased 15.3% year-over-year to $347.43 million. The company’s non-GAAP gross profit came in at $259.72 million, up 15.9% from the prior-year period. Its non-GAAP operating income was $59.89 million, up 37.6% from the prior-year period. NATI’s non-GAAP net income came in at $46.81 million, representing a 38.6% rise from the prior year period. Its non-GAAP EPS increased 34.6% year-over-year $0.35. As of June 30, 2021, the company had $250.42 million in cash and cash equivalents.
NATI’s EPS is estimated to rise 550% year-over-year to $0.18 in the current quarter, ending September 30, 2021. Analysts expect its revenue to be $370.43 million for the current quarter, representing a 20.2% rise year-over-year. The stock’s EPS is expected to grow at a 5.8% rate per annum over the next five years. The stock has gained 18.8% over the past year and ended Friday’s trading session at $41.16.
NATI’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Growth, Stability, Sentiment, and Quality. Click here to see the additional ratings for NATI’s Value and Momentum.
Of the 149 stocks in the Software - Application industry, NATI is ranked #3.
Commvault Systems, Inc. (CVLT)
CVLT provides data protection and information management software applications and related services internationally. The company also sells appliances that integrate the software with hardware for use in a range of business needs and use cases. It sells directly through its sales force to enterprises, government agencies and indirectly through its distribution network, value-added resellers, systems integrators, corporate resellers, and OEMs. CVLT is headquartered in Oceanport, N.J.
In an announcement dated September 8, 2021, CVLT added the new Ransomware Protection and Response Services offering its Data Security Solutions portfolio to assist customers in combating rising cyber threats and data breaches. Along with Commvault software and cloud offerings, this offering will likely witness great demand from hybrid working models in the coming months.
On July 20, 2021, CVLT announced its support for Amazon.com, Inc.’s (AMZN) Amazon Web Services (AWS) “AWS for Health” initiative as a vehicle for delivering secure, scalable, and compliant data management and protection solutions for organizations in the healthcare space. CVLT’s broad native support for AWS services and integration into leading EHR systems allow customers to efficiently manage their healthcare data and protect it from looming threats like ransomware.
CVLT’s total revenue for its fiscal first quarter, ended June 30, 2021, increased 6% year-over-year to $183.42 million. The company’s gross profit has been reported at $158.15 million, up 6.5% from the prior-year period. Its non-GAAP income from operations came in at $41 million, representing a 26.3% year-over-year improvement. CVLT’s non-GAAP net income was $30.03 million, up 25.4% from the prior-year period. And its non-GAAP EPS increased 21.6% year-over-year to $0.62. The company had $359.15 million in cash and cash equivalents as of June 30, 2021.
Analysts expect CVLT’s EPS to improve 26.7% in the current quarter, ending September 30, 2021, to $0.57. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $184.79 million for the current quarter, representing an 8% rise year-over-year. Its EPS is expected to grow at a 10% rate per annum over the next five years.
The stock has gained 94.5% in price over the past year and 23.5% over the past six months. It closed Friday’s trading session at $77.48.
CVLT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Quality, and a B grade for Growth and Value. Click here to see the additional ratings for CVLT (Sentiment, Stability, and Momentum).
CVLT is ranked #2 in the Software - Application industry.
Progress Software Corporation (PRGS)
PRGS develops and markets business applications for rapid application development, broad data integration, and efficient data analysis. The Bedford, Mass.-based company sells its products to end-users, independent software vendors, OEMs, and system integrators.
On September 23, 2021, PRGS entered a definitive agreement to acquire Kemp, Inc., a leader in the load balancer and application delivery controller (ADC) market. Combining PRGS’ Application Experience Management (AX) and Kemp’s capabilities in balancing traffic and workloads across servers, in the cloud or on-premises, should enable it to offer the best application experience solution in the market.
On September 15, PRGS made available its Progress Sitefinity DX 14.0 platform, which allows organizations to create an ideal digital experience platform (DXP) offering cost-effective, low-code integration and chat-driven engagement, as well as enhanced headless content delivery. Amid the ongoing digital transformation, the company expects to generate high demand from organizations seeking to create omnichannel experiences that deliver the right content.
For its fiscal third quarter, ended August 31, 2021, PRGS’ non-GAAP revenues increased 37.6% year-over-year to $152.60 million. The company’s non-GAAP operating income came in at $71.16 million, up 51% from the prior-year period. Its non-GAAP net income came in at $52.58 million for the quarter, representing a 47.7% year-over-year improvement. Its non-GAAP EPS was $1.18, indicating a 51.3% rise from the year-ago period. The company had $383.68 million in cash, cash equivalents, and short-term investments as of June 30, 2021.
The consensus revenue estimate for the current quarter, ending November 30, 2021, is expected to rise 9.4% year-over-year to $141.18 million. PRGS surpassed the consensus EPS estimates in each of the trailing four quarters. And its EPS is expected to grow at a 10% rate per annum over the next five years.
PRGS has gained 50.8% in price over the past year and 16.9% over the past month. It closed Friday’s trading session at $53.10.
It’s no surprise that PRGS has an overall B rating, which equates to Buy in our POWR Ratings system.
The stock has an A grade for Quality, and a B grade for Value. Click here to see the additional ratings for PRGS’ Growth, Stability, Sentiment, and Momentum.
It is ranked #5 in the Software - Application industry.
American Software, Inc. (AMSWA)
AMSWA in Atlanta, Ga., develops, markets, and supports a range of computer business application software products and services that deliver enterprise management, supply chain, and retail planning solutions to the marketplace internationally. It operates through three segments--Supply Chain Management (SCM), Information Technology Consulting (IT Consulting), and Other.
On September 9, AMSWA subsidiary Logility, Inc a leader in supply chain innovation powering the sustainable and resilient enterprise, partnered with PwC, an integrated consulting and auditing services firm, to bring the latest innovation in supply chain technology and services that enable digital transformation to strengthen its local Brazilian market presence. Providing greater efficiency, better alignment with demand, optimization of inventory, and reduced costs, the company expects to witness great demand for this solution from enterprises in the coming months.
In an announcement dated August 24, 2021, Logility, Inc. said it collaborated with Körber, a Germany-based strategic management holding that offers products, solutions, and services in various business areas, to elevate its comprehensive suite of solutions. With this, customers can access Logility’s planning solutions and Körber’s warehouse and transportation management solutions, allowing organizations to optimize their end-to-end supply chains.
For its fiscal first quarter, ended July 31, 2021, AMSWA’s total revenues increased 7.3% year-over-year to $29.27 million. The company’s gross profit came in at $16.90 million, up 18.7% from the prior-year period. Its adjusted operating earnings were $2.60 million, indicating a 49.2% year-over-year improvement. While its adjusted net income increased 28% year-over-year to $3.61 million, its adjusted EPS increased 22.2% to $0.11. As of July 31, 2021, the company had $91.85 million in cash and cash equivalents.
A $0,07 consensus EPS estimate for the current quarter, ending October 31, 2021, represents a 40% year-over-year improvement. AMSWA’s revenue is estimated to rise 6.5% year-over-year to $29.69 million in the current quarter. It surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. AMSWA’s EPS is expected to grow at a 16% rate per annum over the next five years.
The stock has gained 81.1% over the past year and 8.8% over the past month. It ended Friday’s trading session at $24.84.
AMSWA’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Sentiment, and a B grade for Growth, Stability, and Momentum. Click here to see the additional ratings for AMSWA’s Value and Momentum.
AMSWA is ranked #4 in the Software - Application industry.
NATI shares were trading at $42.40 per share on Monday afternoon, up $1.24 (+3.01%). Year-to-date, NATI has declined -1.60%, versus a 19.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.4 Buy-rated Software Stocks to Add to Your Portfolio appeared first on StockNews.com