Is Teradata on A Roll?
Renia is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It seems that Teradata (NYSE: TDC), a global analytic data solutions company, is on a roll these days. Just this January, the company again stamped its class in demand data and in business intelligence as it was named for the seventh straight year among the 10 Best in Class in these competencies. The rankings, done through a readers’ poll by the Consumer Goods Technology magazine, were based not only on technical excellence. Consumer goods executives polled by the magazine likewise gave lofty ratings to Teradata on customer satisfaction.
A similar accolade was bestowed to the company’s Teradata Applications unit this February. For the eleventh year, this Teradata service provider on integrated marketing management solutions was installed by Gartner Inc. in its "Magic Quadrant for Marketing Resource Management (MRM)" report. This report by the Stamford, Connecticut-based technology research and advisory firm ranks vendors based on completeness of their MRM vision in market and their ability to execute on that vision.
From Intangibles to Concrete Gains
Sure, these accolades are intangibles that cannot be accurately monetized or translate dollar signs to the bottom line. This February, however, Teradata released fourth-quarter earnings reaffirming the strength of its technology and its people’s topnotch expertise in integrated marketing solutions and market analytics.
During the quarter, the company’s earnings rose 14%, bolstered by a sharp rise in its consulting services revenues. Teradata had a $112 million profit for a per-share earnings $0.66, an increase from the year-ago earnings of $98 million or $0.57 per share. With amortization, stock-based compensation, reorganization costs, and related items excluded, the company’s earnings amounted to $0.79, up from the $0.66 posted during the comparable period.
Its revenue rose 10% to $740 million, easily beating the $724 million expectations from analysts who also forecasted $0.70–$0.74 EPS. Like the string of awards it received, Teradata consistently achieved net income gains in the previous three quarters: 19.5% in the third quarter, 8.7% in the second quarter, and 40% in the first quarter. With such a consistency, it comes as no surprise Teradata shares got a buy rating from an estimated 61.1% of analysts while its nearest ten competitors had an average 47.2% buys.
Computer Sciences Corporation (NYSE: CSC), is one technology issue that can’t be groomed to be in the same league as Teradata anytime soon. This company which is also engaged in IT business solutions and services posted a $4.2 billion net loss for fiscal 2012. Its accounting practices are also facing investigation from the SEC. Besides this regulatory debacle, reduced government spending is another problem as the company has some one-third of its revenues drawn from government contracts.
Be that as it may, CSC recently exhibited signs of recovery. In the quarter ending December 28, the company returned to profitability with earnings of $513 million or $3.27 per share, rising from a loss of almost $1.4 billion (-$8.96) from a year earlier. Additionally, CSC said it is en route toward winning more contracts in such growth sectors as cloud cybersecurity and computing.
Better But Still on the Mend
The fortunes of another IT technology solutions company, SAIC Inc (NYSE: SAI), appear to be faring better than CSC in terms of government deals. Despite cuts in government expenditures, the company was awarded this February a $58-million contract from the U.S. Army National Guard. Under this contract, CSC will provide support for the not only in the operation but also in the expansion, modernization, and evolution of the National Guard’s Enterprise Operations and Security Services concept and associated IT services.
Besides its clientele in military and civilian government agencies, SAIC also provides IT services and solutions to select commercial markets and foreign governments. Profitability-wise, SAIC has emerged as a winner just lately. Also rated a buy by some analysts, SAIC’s latest quarterly report showed a 225.8% increase in its net income to $112.00 million, a reversal of the $89 million loss in the year-earlier period. This growth significantly surpassed that of the IT Services industry and the S&P 500.
Constant Innovation is the Key
With SAIC and CSC still recuperating from earlier losses, it would appear then that Teradata remains as the solid bet among the three. Besides its robust financials, the company further justified the accolades it received with its continuing efforts to bring innovative client offerings. Also this January, it launched yet another potential market winner in the Teradata CSP Next Generation Analytics Framework. The company flaunts its latest offering as “the first integrated CSP solution to provide a 360-degree view of customers,” enabling its users to leverage both multi-structured interaction data and conventional transaction data.
ReniaBula has no position in any stocks mentioned. The Motley Fool recommends Teradata. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!