This Stalled Rocket Looks Ready to Ride Again

Shares of TIBCO Software (Nasdaq: TIBX  ) have soared more than 500% in 30 months, starting at the depth of the global finance crisis of 2008. But the stock appeared to hit a glass ceiling at that level, and has rarely moved above the $30 level since. The stock has regained some of its old market-crushing mojo in 2012, with a solid 27% year-to-date gain.

Will the maker of ultra-fast data-crunching tools for enterprise-class business continue its recent rise after reporting third-quarter results this Thursday night?

Word on the Street
Analysts expect TIBCO's earnings to rise 17% year-over-year, landing at $0.27 per share. The company has increased earnings by at least 33% in each of the last six quarters, so hitting that modest growth target would be a downer. Do keep in mind that the company has beaten analyst earnings estimates for 16 quarters straight, though.

Management's own guidance range centers at $0.26 per share, give or take a penny. The company's long-term goal is to deliver 15% to 20% annual earnings growth per share, so the current pace still tracks ahead of TIBCO's own measures of fundamental success.

Wall Street's sales estimates are also in line with TIBCO's guidance; both point to about $260 million, or 13.5% annual growth.

CEO Vivek Ranadive actually sees opportunity in the shaky global economy. "What we're seeing right now is, it seems kind of counterintuitive, but actually companies are willing to spend big money if you can demonstrate value to them," he said in the second quarter's earnings call. "I think we're leaving money on the table right now, and I want to go pick it up."

To that end, he made some dramatic changes to his top-level sales team and doubled down on adding new hires to that side of TIBCO's operations. From Vivek's perspective, the product is poised for success if he can only put it in front of the right clients.

Small fish exploring a big pond
That's a gutsy call to make when you're competing against software heavyweights IBM (NYSE: IBM  ) and Oracle (Nasdaq: ORCL  ) at every turn. But TIBCO's track record speaks for itself. Clients seem hungry for the quick-response analytics that are TIBCO's trademark. Every second counts, and this company sells a "two-second advantage" over other solutions.

That selling point gives TIBCO​ traction no matter what the economy looks like. In fact, soft IT budgets tend to give an edge to value-boosting products. Red Hat (NYSE: RHT  ) rides the same value-added pony as TIBCO, and has also tripled in value over the last four years. That's not bad company to keep.

Rumor has it (constantly, it seems) that IBM or Oracle might want to buy TIBCO rather than throwing money and development into beating it in the market. But the company would lose its vendor-neutral status under the wing of an established giant. The buyer would probably not get full value from a deal like that, because much of TIBCO's success comes from its skill at managing information pouring out of other companies' data generators. So you should expect those rumors to stay in the rumor mill.

What to expect
Look for another solid quarter from TIBCO this week. We need to know how the changes to the sales team are working out, and the troubled European market should provide a barometer for the rocky road ahead. If you can make it here, at this particular moment in time, you'll make it anywhere.

Maybe you've seen our free report on three companies that are ready to rule retail. (If you haven't, grab your copy right now and enjoy the visionary advice!) If these disruptive retailers aren't using TIBCO's analytics tools already, they're at least kicking the tires.

Fool contributor Anders Bylund holds no position in any of the companies mentioned, and can often be seen kicking himself for this oversight. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Oracle and International Business Machines. Motley Fool newsletter services have recommended buying shares of Tibco Software. Motley Fool newsletter services have also recommended creating a synthetic long position in International Business Machines. The Motley Fool has a disclosure policy.

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