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Why NIC Stock Fell 11.7% in January

By Keith Noonan - Feb 9, 2020 at 12:31PM

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A significant earnings miss sent the cloud software stock tumbling last month.

What happened

Shares of NIC (EGOV) dipped 11.7% in January, according to data from S&P Global Market Intelligence . The government software company's stock sank after the company published fourth quarter earnings results that came in below the market's expectations.

EGOV Chart

EGOV data by YCharts

NIC released fourth quarter earnings after the market closed on Jan. 29, with sales topping the average analyst estimate but earnings falling short of the market's target.

The company recorded non-GAAP (adjusted) earnings per share of $0.13 share on sales of $87.07 million, while the average analyst estimate had guided for earnings per share of $0.15 on sales of roughly $85.3 million.

A cloud icon and a person using a mobile device.

Image source: Getty Images.

So what

NIC's sales climbed roughly 11% year over year in the fourth quarter, and diluted earnings per share were flat compared to the prior-year period. However, the company's results were also lifted by a beneficial tax impact of $0.02 per share. Same-state enterprise revenues climbed roughly 11% year over year to reach $79.3 million, and same-state transaction revenue from government services climbed 16% year over year. 

Revenue for the full-year period climbed roughly 3% year over year to $354.2 million, and operating income for the period declined roughly 13% annually to land at $62.4 million. Diluted earnings per share for the fiscal year came in at $0.75 -- down roughly 14% year over year, despite a $0.04 per share tax benefit. 

Now what

NIC stock has regained some ground in February, with shares trading up roughly 4% in the month so far. 

EGOV Chart

EGOV data by YCharts

The company is guiding for revenue to come in between $380.5 million and $391 million in fiscal 2020. Diluted earnings per share are expected to be between $0.76 an $0.81 per share. 

NIC is valued at roughly 26 times forward earnings and 3.6 times forward sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIC. The Motley Fool has a disclosure policy.

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