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 Luxoft (NYSE:LXFT) are trading 10% higher today after the Swiss information-technology specialist reported strong results for its fiscal third quarter.
So what: Luxoft's earned $145.8 million in revenue for the quarter, resulting in earnings of $0.81 per share. Both results easily beat Wall Street's expectation of $140.3 million in revenue and just $0.61 in EPS. Luxoft is growing quickly, as its quarterly top line was up 32% year over year and adjusted EPS grew a full 50% from the year-ago quarter.
Luxoft remained firm on its earlier full-year guidance for revenue of at least $510 million, but it upgraded its adjusted EPS guidance from a prior minimum of $2 to a new floor of $2.15. This works out to fiscal fourth-quarter guidance for revenue of at least $126.8 million and adjusted earnings of at least $0.33 per share. Luxoft's quarterly expectations are weaker than Wall Street's projections for $511 million in revenue and $0.53 in EPS, but the company's new full-year EPS guidance floor now surpasses Wall Street's expectation of $2.12.
Now what: Luxoft hasn't been public for very long, but the stock has already doubled from its first day of trading. Most of that growth has resulted from a rising P/E ratio, which is 75% larger today than it was when Luxoft went public last summer. However, Luxoft's P/E is still only 26.7, and its full-year guidance works out to a forward P/E of just 22. Luxoft expects its full-year EPS to grow by at least 24% over the prior year's result, and that growth rate merits a look at today's valuation.
Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.