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Factors to Consider Ahead of ANSYS' (ANSS) Earnings in Q2

Zacks Equity Research

ANSYS ANSS is scheduled to report second-quarter 2019 results on Aug 5.

The company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 28.96%.

Q1 at a Glance

In first-quarter 2019, ANSYS had delivered non-GAAP earnings of $1.29 per share, surpassing the Zacks Consensus Estimate by 18.4%. The figure also improved 8% year over year.

Non-GAAP revenues of $319.9 million comfortably outpaced the Zacks Consensus Estimate by 4.6% and advanced 13% year over year.

Guidance & Estimates for Q2

ANSYS expects non-GAAP earnings in the range of $1.18 per share to $1.30 per share for second-quarter 2019. The Zacks Consensus Estimate for earnings is pegged at $1.28 per share, suggesting a decline of 5.2% from the year-ago reported quarter. Notably, estimates have remained unchanged in the past 30 days.

Management anticipates non-GAAP revenues in the range of $290 million to $310 million for second-quarter 2019. The Zacks Consensus Estimate for revenues is currently pegged at $338.52 million, indicating an improvement of 10.7% from the year-ago reported figure.

Notably, the Zacks Consensus Estimate for Maintenance and service revenues is pegged at approximately $194 million, indicating growth of 11% from the year-ago reported figure. Meanwhile, consensus for Software Licenses revenues stands at $140 million, suggesting growth of 7% from the year-ago quarter.

Let’s see how things are shaping up prior to this announcement.

ANSYS, Inc. Price and EPS Surprise


ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. price-eps-surprise | ANSYS, Inc. Quote

Factors Likely to Influence Q2 Results

Robust Adoption of Simulation Solutions & Product Rollouts

ANSYS is witnessing robust demand for simulation software solutions, particularly from automotive end-market, which is likely to aid the to-be-reported quarter’s top line.

The company’s simulation software is enabling RFS to design 5G-compliant antennas and Volkswagen to accelerate electric vehicle speed. ANSYS recently announced it is teaming up with BMW Group, which will utilize the company’s simulation tools to design robust AV technologies. It is also collaborating with Airbus Defence and Space to develop a new solution which facilitates AI-driven, secure flight controls to design robust autonomous drone flight control solution by 2030. These deals are expected aid the upcoming quarterly results.

An expanding customer base is instilling confidence in the stock. Notably, shares of ANSYS have returned 45.4% year to date, significantly outperforming the industry’s rally of 34.9%.

Moreover, ANSYS’ VRXPERIENCE integrated service is already enabling RENAULT’s design developers to accelerate testing and validation of automotive applications. The company’s RedHawk-SC solution is enabling Mellanox MLNX to accelerate development of FinFET chip design.

The company recently released ANSYS 2019 R2, in a bid to enable engineers design more pervasive simulation solutions across multiple industries. The incremental adoption of ANSYS’ innovative products is expected to benefit the top line in the second quarter.

However, as ANSYS continues to invest on product development, its margin is likely to affect the second quarter and the days ahead.

Buyouts Strengthening Portfolio Remain Noteworthy

Synergies from ANSYS’ strategic acquisitions are expected to positively impact the upcoming quarterly results. For instance, Granta Design and Helic buyouts are expected to aid the company to strengthen portfolio with robust software simulation capabilities.

Further, in the quarter under review, ANSYS acquired all assets of DfR Solutions. The acquisition is aimed at providing customers with designer-level toolkit to investigate for electronics failure at the nascent design stage. The buyout is expected to aid ANSYS enhance strength in automotive, avionics and aerospace, and other domains.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

ANSYS has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Clearway Energy CWEN has an Earnings ESP of +15.00% and a Zacks Rank #1. The company is slated to report second-quarter 2019 results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International Inc CACI has an Earnings ESP of +4.02% and a Zacks Rank #2. The company is set to report fourth-quarter fiscal 2019 results on Aug 14.

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