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 (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.
