Dueling Fools: Nuance Bull Rebuttal

In his opening argument, my fellow duelist Jason Ramage points out that Nuance Communications (Nasdaq: NUAN  ) has failed to attain profitability in recent years. Although a company operating in the red is certainly not a positive trend, we must take a look at the big picture.

For instance, in the company's current quarter, Nuance reported a net loss of $0.02 per share. Fortunately, much of this loss is only a loss on paper. The company was required under GAAP purchase accounting guidelines to record a number of amortization charges pertaining to previous acquisitions, as well as a non-cash stock-based compensation. In the current quarter, Nuance actually reported non-GAAP income of $0.18 per share. This amount marked a 28.5% improvement over its non-GAAP income of $0.14 per share in its year-ago quarter.

Gross margins and operating income have both remained positive for Nuance. As mentioned in my opening argument, the company's gross margins have remained consistent with the company checking in at 66% for Q4, which is about the same as the third quarter. Nuance also posted impressive growth in its operating income over this same period, as this metric surged from about $6.8 million in the company's prior-year Q4 to about $9.2 million in the company's most recent quarter.

Jason also mentions future competition from companies such as NMS Communications (Nasdaq: NMSS  ) and Voxware (Nasdaq: VOXW  ) . I don't really see either of these penny stocks with market caps less than $100 million as much of a match for Nuance. Nuance has already established itself in the marketplace and that is why it is continuing to expand its business with prominent companies such as AT&T (NYSE: T), Bank of America (NYSE: BAC), Disney (NYSE: DIS), and WellPoint (NYSE: WLP  ) .

Only time will tell how smoothly the company is able to integrate new acquisitions into its business, but it is this very same growth characteristic that gives the company's stock appeal and future upside potential. This stock's recent pullback provides Fools with a prime buying opportunity that should not be overlooked.

Read/Post Comments (1) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 21, 2007, at 5:21 PM, prginww wrote:

    Nuance is far best speech recognition sw for radiologists and medical records room. My hospital is in precces of buying now as most other places too.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 540651, ~/Articles/ArticleHandler.aspx, 10/25/2016 3:53:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,173.83 -49.20 -0.27%
S&P 500 2,143.84 -7.49 -0.35%
NASD 5,281.05 -28.78 -0.54%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 3:38 PM
NUAN $13.73 Down -0.18 -1.29%
Nuance Communicati… CAPS Rating: ****
ANTM $124.49 Down +0.00 +0.00%
Anthem CAPS Rating: *****
NMSS $0.08 Down +0.00 +0.00%
NMS Communications CAPS Rating: No stars