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The culture of remote working is also expected to continue due to the rapid spread of the COVID-19 delta variant, which requires the reintroduction of pandemic restrictions in some countries and locations. This, coupled with the ongoing digital transformation in several industries, should boost the demand for software solutions. Therefore, we believe that leading software stocks Adobe (ADBE), Constellation Software (CNSWF), NICE Ltd. (NICE) and PTC Inc. (PTC), which were rated A (Buy) in our proprietary rating system, could continue to rise in price. So let's take a closer look at these names. Continue reading.
The software industry is one of the biggest beneficiaries of the COVID-19 pandemic, given the growing demand for digital solutions in virtually all industries. The artificial intelligence (AI) market is also booming due to its widespread use in core industries. According to International Data Corp. (IDC), AI spending is on track 2021 will increase by 15.2% compared to the previous year. The IDC analysts also expect robust growth in the following years.
As COVID-19 cases rise again, several countries are reintroducing social distancing and travel restrictions. With this in mind, remote work should continue for at least the next few months. It is also expected that the ongoing digital transformation in almost all sectors will accelerate the growth of the software industry.
Therefore, we believe fundamentally healthy stocks of Adobe Inc. (ADBE), Constellation Software Inc. (CNSWF), NICE Ltd. ADR (KIND) and PTC Inc. (PTC) that have A (Buy) in our proprietary Overall Rating POWR ratings System could move forward.
Click here to read our Software Industry Report for 2021
Adobe Inc. (ADBE)
ADBE is a well-known software company based in San Jose, California that operates in three segments: digital media; Digital experience and publication. The company offers products and services for creating, managing, measuring, optimizing and interacting with compelling content and experiences.
On April 27, ADBE announced the next generation of its Real-time Customer Data Platform (CDP), which is the only enterprise application architecture built from the ground up for data-driven first-party customer acquisition and retention. The company expects to work with brands to deliver relevant, responsive, and respectful experiences through first-party data.
ADBE revenue increased 22.6% year over year to $ 3.84 billion for the second fiscal quarter ended June 4th. Gross profit was $ 3.39 billion, 25% more than the same period last year. Operating profit increased 38.4% year over year to $ 1.41 billion. Cash and cash equivalents for the period increased 39.6% from the year-ago quarter to $ 4.25 billion.
A consensus revenue estimate of 4.04 billion The Street expects the company's earnings per share to increase 9.6% year over year to $ 3.08 in the next quarter. ADBE has an impressive track record with surprises; it outperformed consensus EPS estimates for each of the past four quarters.
ADBE was up 27.8% over the past six months, closing yesterday's trading session at $ 636.94. The share gained 41.6% in the past year.
ADBE's strong fundamentals are reflected in its POWR ratings. ADBE has an overall B rating which is equal to purchase in our proprietary POWR rating system. The POWR ratings are calculated taking 118 different factors into account, with each factor being optimally weighted.
ADBE is rated A for quality and B for stability and mood. Among the 145 shares of the Computer program Industry is ADBE in 20th place.
Click here to view additional ADBE ratings for growth, value, and momentum.
Constellation Software Inc. (CNSWF)
CNSWF, together with its subsidiaries, acquires, builds and manages vertical software companies in the US, Canada, Italy, Germany, India, UK, Brazil, Switzerland, Austria, Israel and internationally. The company is headquartered in Toronto, Canada.
On June 7th, the CNSWF announced an agreement with the Fair Isaac Corporation (FICO), a leading predictive analytics and decision management software company, to acquire its collection and recovery business. This agreement is designed to expand its portfolio and enable the company to grow by leveraging FICO's expertise.
CNSWF's revenue increased 35.5% year over year to $ 1.25 billion for the second fiscal quarter ended June 30. Earnings per share rose 6.7% year over year to $ 4.16. The company's cash position for the period increased 45.5% to $ 851 million from the prior year quarter.
A consensus revenue estimate of $ 1.33 billion for the third fiscal quarter ending September 30, 2021 represents an improvement of 32.5% over the same period last year. Analysts also expect the company's revenue to be $ 1.40 billion in the next quarter, up 28.7% year over year.
Last year, CNSWF was up 42.9% and closed yesterday's trading session at $ 1,640.37. The share has gained 25.9% since the beginning of the year.
The company has an overall rating of B, which means buy in our proprietary rating system. In addition, CNSWF has a grade of A for stability and B for quality. It is ranked 25th in the Computer program Industry.
In addition to the above, we also rated CNSWF for growth, value, sentiment and momentum. Click here to view all CNSWF ratings.
NICE Ltd. ADR (NICE)
NICE offers enterprise software solutions worldwide. The company also offers AI-driven smarter processes, agile employee engagement and solutions for managing customer experiences. NICE based in Ra & # 39; anana, Israel, operates in two segments: Customer Engagement and Financial Crime and Compliance.
On August 4th, NICE launched its CXone SmartAssist, powered by Amelia, the industry-leading conversational AI solution for customer service, to improve conversation across the entire Customer Experience (CX) journey. The industry's first and only specially developed AI, trained to understand the intricacies of customer loyalty, demonstrates the company's technological capabilities.
Total NICE revenue increased 16% year over year to $ 456.03 million for the second fiscal quarter ended June 30th. Gross profit increased 18.7% year over year to $ 305.52 million. NICE's operating income was $ 63.98 million, an increase of 14% over the previous year. Company's non-GAAP EPS rose 14.6% year over year to $ 1.57.
The Street expects NICE's revenue to grow 13% year over year to $ 465.86 million for the current quarter through September 2021. The consensus EPS estimate of $ 1.58 for the current quarter indicates an improvement of 12.3% year over year. NICE's shares rose 21.2% last year and 4.6% last month.
It's no surprise that NICE has an overall rating of B, which is the same as the purchase on our POWR rating system. NICE also has the grade B for stability and quality. In addition, it is ranked 16th in the Computer program Industry.
To view additional POWR ratings for growth, value, momentum and sentiment, click here.
PTC Inc. (PTC)
PTC is a global computer software and services company. It offers a portfolio of Computer-Aided Design (CAD) modeling, Product Lifecycle Management (PLM) and Service Lifecycle Management (SLM) solutions for manufacturers to create, operate and maintain products. PTC is based in Needham, Mass.
On May 27, PTC released its new Vuforia Instruct ™ offering designed to simplify the creation of 3D CAD-based work instructions. This improvement should enable industrial companies to increase productivity, improve quality and reduce unplanned downtime. Therefore, PTC's offering from the Vuforia Enterprise Augmented Reality (AR) Suite is expected to be in high demand.
Total PTC revenue for the third quarter ended June 30 increased 23.9% to $ 435.67 million. Operating profit rose 16.1% year over year to $ 73.58 million, while net income improved 47.7% year-over-year to $ 51.20 million. The company's earnings per share rose 43.3% year over year to $ 0.43.
Analysts expect PTC's revenue to grow 20.4% year-over-year to $ 1.76 billion this year. A consensus EPS estimate of $ 3.53 for the current year represents an increase of 37.4% year over year. PTC also outperformed the Street's EPS estimates for each of the past four quarters. PTC's shares are up 49.9% last year and 10.4% year-to-date.
It's no surprise that PTC has an overall rating of B, which equates to Buy in our proprietary POWR rating system. The stock also has a B rating for sentiment and quality. It is ranked 24th in the world Computer program Industry.
To view additional PTC ratings for growth, value, stability, and momentum, click here.
Click here to read our Software Industry Report for 2021
ADBE stock traded at $ 635.01 per share on Tuesday afternoon, down $ 1.93 (-0.30%). Since the beginning of the year, ADBE is up 26.97%, compared to a 19.54% increase in the reference index S&P 500 over the same period.
About the author: Subhasree Kar
Subhasree's keen interest in financial instruments led her to pursue a career as an investment analyst. After completing her master's degree in economics, she gained knowledge of equity research and portfolio management at Finlatics.
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