Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Ellie Mae (NYSE:ELLI), a provider of automated software to the mortgage industry, shot higher by as much as 14% after reporting better-than-expected fourth-quarter results and providing optimistic guidance for 2013.
So what: For the quarter, Ellie Mae's revenue skyrocketed 60% to $29.9 million, with on-demand revenue rising 70% and comprising 89% of all sales as of the end of the quarter. Non-GAAP earnings more than doubled to $0.27 from the $0.13 reported in the year-ago period. Wall Street had been expecting EPS of just $0.21 on revenue of $28.8 million. In addition, Ellie Mae forecast first-quarter EPS of $0.23-$0.24 and revenue of $30 million-$30.5 million versus the consensus of $0.19 and $27.5 million. Ellie Mae's full-year EPS forecast of $1.06-$1.09, also trounced the estimate on the Street of $0.91.
Now what: Ellie Mae should be able to continue to crush estimates as long as housing inventories remain tight, home prices remain stable, and lending rates remain near record lows. It may not represent the best long-term investment as a rise in lending rates could quickly cause mortgage originations to deteriorate, but it still could make for quite the short-term investment over the next one to three years.
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