The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Virtusa met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly, and GAAP earnings per share increased significantly.
Gross margins contracted, operating margins shrank, net margins expanded.
Virtusa reported revenue of $72.2 million. The seven analysts polled by S&P Capital IQ anticipated sales of $71.9 million. Sales were 30% higher than the prior-year quarter's $55.6 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
EPS came in at $0.22. The six earnings estimates compiled by S&P Capital IQ predicted $0.20 per share. GAAP EPS of $0.22 for Q3 were 29% higher than the prior-year quarter's $0.17 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 35.9%, 300 basis points worse than the prior-year quarter. Operating margin was 9.1%, 90 basis points worse than the prior-year quarter. Net margin was 7.7%, 10 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $75.6 million. On the bottom line, the average EPS estimate is $0.24.
Next year's average estimate for revenue is $279.1 million. The average EPS estimate is $0.79.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 93 members out of 98 rating the stock outperform, and five members rating it underperform. Among 33 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 33 give Virtusa a green thumbs-up, and give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Virtusa is outperform, with an average price target of $20.40.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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.