Why CommVault Systems, Inc. Shares Got Destroyed

Is this meaningful or just another movement?

Apr 25, 2014 at 2:58PM

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 CommVault Systems (NASDAQ:CVLT) have lost over 29% of their value today, falling back to levels not seen in nearly two years, after the information-management specialist reported fiscal fourth-quarter results that disappointed investors on the top line.

So what: CommVault's fourth quarter, which ended in March, produced $156.8 million in revenue -- a 13.4% year-over-year improvement -- and $0.52 in adjusted earnings per share. Earnings handily beat Wall Street's consensus of $0.47 per share, but CommVault missed revenue expectations of $160.2 million. In GAAP terms, CommVault's EPS declined from $0.35 a year ago to $0.32 today. The company also declined to offer forward guidance in its earnings release. This could be worrying investors who have picked up on CEO Robert Hammer's comments about the company's "mixed results," which included strong showings in Africa, Europe, and the Middle East but weakness in the Americas.

Now what: Investors have been punishing CommVault all year after propelling its shares to gains of over 600% late 2009 through the fall of 2013. While a lack of guidance is worrying, the GAAP EPS decline is also a bit of an issue, as CommVault's net income has been its strongest metric during the past five years, as it's grown at over twice the rate of its free cash flow, and nearly three times the rate of its revenue.

Despite this issue, CommVault's P/E has now slipped to its lowest level in five years, and its price-to-free cash flow ratio of 20 is rather attractive as well. CommVault may not be done dropping, but it's cheaper today than it's been in years, and that should be a good reason for savvy investors to start digging a little deeper.

Will this stock be your next 10-bagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Alex Planes has no position in any stocks mentioned, and neither does The Motley Fool. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information