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Quest Software Shares Jumped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Quest Software (Nasdaq: QSFT  ) rose more than 11% in early trading after the maker of tools for managing large-scale computer systems reported better than expected third-quarter results. The stock closed up 8%.

So what: Adjusted earnings per share rose two pennies year over to $0.41, or $0.05 better than the consensus. Revenue improved 14% to $220.4 million. Analysts had been calling for $214.5 million.

Now what: Yet both figures paled compared with Quest's ability to generate greenbacks. Cash from operations rose 29% to $23.7 million on the strength of a 143% increase in collections of previously deferred revenue. Does that sort of growth deserve today's run-up? Would you buy shares of Quest Software at current prices? Please weigh in using the comments box below.

Interested in more information about Quest Software? Add it to your watchlist by watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


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Tim Beyers
TMFMileHigh

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At Fool.com, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at timbeyers.me or send email to tbeyers@fool.com. For more insights, follow Tim on Google+ and Twitter.

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