August 9, 2012
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 enterprise communications software provider Tangoe (Nasdaq: TNGO ) had investors sashaying to the sound of 10% gains this morning, after post-close earnings on Wednesday beat the Street by $0.01 per share on the bottom line despite a light top line. Shares are now trading slightly lower as of this writing, but have held on to roughly 8% gains so far.
So what: Tangoe's EPS came in at $0.10 on better-than-expected revenue, which was $36.3 million versus analysts' expectations of $35.3 million. Full-year revenue is now expected to be between $151 million and $153 million, with $0.45 to $0.46 in full-year EPS. Tangoe also announced the acquisition of Symphony Teleca's Telecommunications Expense Management business for $41 million in cash. The deal closed on the same day as Tangoe reported earnings, so it's likely to begin contributing to results soon.
Now what: Tangoe hasn't become profitable enough yet to have a price-to-earnings ratio. The company will have to start generating substantially more net income to justify its current market cap in my eyes, but at least this trend seems to be heading in the right direction. I'll watch sadly from the sidelines for now, having missed out on the stock's doubling over the past year. Wedbush Securities and Stifel Nicolaus disagree with me, though, as both firms upgraded their price targets for the stock today.
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