Can Manhattan Associates Keep Supplying Growth to Shareholders?

Image source: Manhattan Associates.

The functioning of the global economy depends on getting things from one place to another, and Manhattan Associates (MANH 0.29%) provides the supply chain management tools to ensure that its customers have what they need when they need it in order to run their businesses. Yet with the company set to announce its fourth-quarter results on Tuesday, Manhattan Associates investors have seen their stock price dive over the past few months, and even an announcement concerning a relationship with the Asda U.K. subsidiary of Wal-Mart (WMT -0.15%) hasn't been able to move the needle. Let's take a closer look at how Manhattan Associates has fared recently and what investors should expect in its earnings report on Tuesday.

Stats on Manhattan Associates

Data source: Yahoo! Finance.

Can Manhattan Associates get to where it needs to go?
Investors have been slightly upbeat about their views on Manhattan Associates earnings in recent months, boosting their fourth-quarter projections by a penny per share. The stock, however, has gotten punished, falling 21% since late October.

Fundamentally, it's hard to find fault with how Manhattan Associates has done lately. In its third-quarter report in October, the company set more all-time records in producing revenue growth of 13% and net income that topped expectations by more than a nickel per share. Between its professional services, customer support software, and hardware-related revenue, Manhattan Associates did a good job of tapping all of its business lines to grow. Broader relationships with existing clients and also bringing on some new clients helped add to its overall prospects, and despite some growing pains in expanding beyond its core region of strength in the Americas, Manhattan Associates gave positive guidance for the remainder of the year.

The perennial challenge is that it needs its clients to remain healthy in order to keep growing its own business. For instance, one key client for Manhattan Associates is Under Armour (UAA 0.61%), and the latter has seen its athletic apparel business compete effectively against larger retail giants in the industry. Under Armour's success in turn has forced it to face the challenge of managing its warehouse inventory and obtaining data from all of its sales channels to serve its own customers efficiently, and that has given Manhattan Associates the opportunity to serve Under Armour with tools to get the job done.

Still, Manhattan Associates continues to go after lucrative client relationships. In January, it said that it had played what it called a "pivotal" role in developing Wal-Mart subsidiary Asda's new toyou  service. Asda customers can use the fulfillment and service tracking system to collect and return online orders of Asda goods as well as online orders that they made with third-party retailers through Asda's system. Asda believes that this will help the Wal-Mart subsidiary build more relationships with major online retailers seeking to use the Asda delivery network, and Manhattan Associates sees the culmination of five years of partnering with Asda as a testament to its multifaceted capabilities in serving retailers.

In the Manhattan Associates earnings report, investors should look at whether the company comments on the decline in its stock price. Given its sensitivity to the retail economy, the stock's drop could well just be a reaction to concerns about the health of the current global expansion. If those concerns start to show up in Manhattan Associates' fundamental numbers, however, it could mean further pressure on the company in 2016 and beyond.