Shares of Nutanix (NTNX, Financial) surged today, rising by 19.86% after the company announced better-than-expected fiscal fourth-quarter earnings.
Nutanix reported a revenue increase of 11% to $548 million, surpassing the consensus estimate of $536.9 million. Annual contract value billings rose 21% to $338 million, while annual recurring revenue grew by 22%, indicating potential revenue acceleration in upcoming quarters. Additionally, the company’s gross margin improved by 150 basis points to 85.2%.
Adjusted operating income climbed from $63.6 million to $70.5 million, and adjusted earnings per share increased from $0.24 to $0.27, beating the consensus estimate of $0.20. Free cash flow also saw significant growth, jumping from $45.5 million to $224.3 million due to increased deferred revenue.
Looking ahead, Nutanix management forecasts first-quarter revenue between $565 million and $575 million, aligning with the analyst consensus of $573.3 million. For the full fiscal year, revenue is projected to be between $2.435 billion and $2.465 billion, reflecting a 14% increase at the midpoint.
Currently, Nutanix (NTNX, Financial) is priced at $62.675 with a market cap of $15.46 billion. Despite a GF Value indicating it is "Significantly Overvalued" at $35.22, the stock has shown impressive performance metrics. The Piotroski F-Score of 7 suggests a healthy financial situation, and the Beneish M-Score of -2.84 implies that the company is unlikely to be a manipulator.
However, investors should note some concerning indicators, such as the Altman Z-score of 1.21, which places Nutanix in the distress zone, indicating a possibility of bankruptcy in the next two years. Insider activity also suggests caution, with three insider selling transactions reported over the past three months.
In terms of growth, Nutanix has seen a revenue growth rate of 7.9% over the past year, with an EBITDA growth rate of 0%. The stock’s gross margin has improved significantly to 84.56%. Despite these positive indicators, the company has zero price-to-earnings (PE) ratio due to negative trailing twelve months earnings per share (EPS) of -$0.07.
Lastly, the stock’s volatility is relatively high, with a 52-week range of $30.27 to $73.69, and its beta of 0.43 suggests lower market risk compared to the broader market. The quick ratio of 1.81 implies sufficient liquidity. Institutional ownership remains strong at 90.92%.
Given these mixed signals, it’s essential for investors to weigh both the promising earnings report and the potential financial distress indicators before making an investment decision.
