SolarWinds, Inc. (SWI) has seen big gains over the last few months, jumping higher with the market on strong Q3 results that came in well ahead of expectations. With an average earnings surprise of 29% over the last four quarters and bullish 13% growth projection, this Zacks #1 Rank stock is a solid pick for momentum.
Company Description
SolarWinds develops, sells and supports information technology infrastructure management software worldwide. The company was founded in 1999 and has a market cap of $1.5 billion.
SolarWinds recently hit a new all-time high, fueled by strong Q3 results from late October that came in well ahead of expectations.
Third-Quarter Results
Revenue for the period was up 31% from last year to $54 million. Earnings also came in strong at 29 cents, 45% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 29% over the last four quarters.
The strong quarter was driven by maintenance revenue, with revenue up 40% from last year to $28 million. License revenue was up 22% to $25.5 million.
Financial Profile
The company has used its earnings momentum to strengthen its already solid financial profile, with cash and short-term investments up 58% from last year to $163 million against no long-term debt.
Estimates
We saw some solid movement in estimates off the good quarter, with the current year adding 10% to 88 cents. The next-year estimate is pegged at $1.00, a bullish 13% growth projection.
With a PEG ratio of 2.54, SWI trades at a premium to the benchmark of 1 for value.
12-Month Chart
On the chart, shares have been surging for the last few months on the good quarter, recently hitting a new all-time high. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
