SolarWinds, Inc (SWI) has a relatively short, but strong earnings history. The most recent quarter was record-setting and better than expected.
Company Description
SolarWinds offers IT management for companies of all sizes around the world. The offerings are downloadable, provide customizable solutions and an online community of thousands of IT professionals.
Record Quarter
On Aug 3 SolarWinds reported a 29% jump in revenue, putting the top line at $45.8 million to set a company record. Earnings per share came in 2 cents higher than the Zacks Consensus Estimate at $0.19. The company has 3 surprises in the past 4 quarters and has not missed a number since its mid-2009 IPO.
SolarWind’s CEO said, “for the second half of the year, we plan to remain focused on delivering strong margins and cash flow despite the significant investments we continue to make in order to drive future growth in our business.”
Double-Digit Growth
Analysts raised estimates this year to account for the earnings surprise, but also upped their forecasts for 2012. The Zacks Consensus Estimate for this year rose 2 cents, to $0.79. Next year’s average projection is up a nickel, to $0.97.
Last year SolarWind earned $0.61, so the expected growth rates are at 30% and 22%, respectively. The upward revisions combined with the earnings surprise give SWI a Zacks #1 Rank (Strong Buy).
Regaining Momentum
Shares slide quite a bit over the summer, but the earnings surprise has rejuvenated investor sentiment regarding SWI. You can see the jump on the quarterly report and subsequent gains. The MACD is showing that momentum has swung back into a positive direction and could help drive future gains.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
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