Can Verint Systems Tap Into Big-Data Growth?

Next Monday, Verint Systems (VRNT 2.27%) will release its latest quarterly results. Yet as the company's growth has slowed recently, can the stock maintain its fairly expensive valuation?

Verint is a small company in the rapidly expanding industry of enterprise intelligence and data analytics, with software designed to help companies make the most of the data they collect on their customers via the Internet, video, data networks, and other electronic means. The company is also working to defend customers against cyber attacks from hostile parties. Let's take an early look at what's been happening with Verint Systems over the past quarter and what we're likely to see in its report.

Stats on Verint Systems

Source: Yahoo! Finance.

Can Verint keep its earnings safe this quarter?
Wall Street's views on Verint's earnings lately have come down a bit, with estimates for the April quarter having dropped $0.04 per share, while analysts have also cut full-year projections by $0.02 per share. The stock has largely been treading water for the past several months, having fallen just half a percent since the end of February.

Verint has been going through a significant restructuring that it finally completed in February, under which Verint acquired Comverse Technology. Comverse Technology had previously owned a majority stake in Verint, but after Comverse Technology spun off another of its subsidiaries into the now-separately traded Comverse (NASDAQ: CNSI), Verint bought out its former parent and sold off Comverse's other subsidiaries. The move finally leaves Verint free to pursue its own path while letting the new Comverse focus on its own cloud-computing and customer-relationship management products.

Lately, there's been continued speculation about whether Verint should merge with rival NICE Systems (NICE 1.00%). The two companies share many of the same strengths but focus on different business niches, with NICE having a lucrative deal with IBM (IBM 1.05%) under which NICE integrates IBM's big data analytics into its own customer management software solutions. NICE also does more private-sector work in areas like call centers, while Verint's security division is especially useful for government contracts. Some have argued that IBM and NICE would make good partners, but for Verint, the move would combine two entities that could help each other fill in gaps in their respective business models.

Even in the absence of a deal, however, Verint has plenty of potential. With cyber-security issues having gained in importance in light of numerous cyber-attacks recently, the company could easily see that segment of its business become the dominant growth engine in the coming years. Given the huge competitive pressure in the broader business-services industry, having the cyber-security specialization is extremely valuable.

In Verint's report, look for signs of how the company's first quarter of completely independent existence went. Often, corporate restructurings pave the way for big initiatives, and with so much growth potential, Verint shouldn't waste any time before moving aggressively forward with expansion plans.

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