The bear market in stocks is still in full swing and, when you look at what companies are reporting, you'll see it isn't unreasonable that the main st...
The bear market in stocks is still in full swing and,
when you look at what companies are reporting, you'll see it isn't unreasonable that the main stock market indices are where they are. For the most part, fourth-quarter earnings season was modest and many companies were not able to beat consensus Wall Street estimates on revenues. Not only this, but the vast majority of companies this earnings season have already disclosed that future quarters will be below previous estimates.
This is why it's so exceptional to find a company that's actually beating Wall Street expectations. And not just for the latest quarter; it's also providing guidance above current estimates for the future.
Back in September of last year, I wrote about this company in this column. This relatively new listing on the NASDAQ is called ArcSight, Inc. (NASDAQ/ARST). This small company is in the business of selling information technology (IT) security products to corporate and government customers. The company's products are mainly designed to safeguard customers' IT assets, which include databases, applications, files, servers, desktops, and network devices.
Some of ArcSight's customers include DISA (Defense Information Systems Agency), the U.S. Securities & Exchange Commission, Verizon, the U.S. Federal Reserve, Xerox, McAfee, HealthSouth, Union Bank of California, Harris, Capital Blue Cross, and the U.S. Dept. of the Treasury.
In its latest quarter, the third fiscal quarter ended January 31, 2009, ArcSight reported that it generated revenues of some thirty-six million dollars, up from comparable revenues of almost twenty-eight million dollars generated in the same fiscal third quarter last year.
The company reported solid net income of $5.1 million, or $0.15 per diluted share, up markedly from net income of $2.4 million, or $0.09 per diluted share, generated in the same quarter last year.
ArcSight finished its latest quarter with cash and cash equivalents of almost eighty-three million dollars, and without any material debt.
For the nine months ended January 31, 2009, ArcSight generated total revenues of close to ninety-seven million dollars, representing a 34% increase over the same quarter in fiscal 2008. Net income for this period was $5.6 million, or $0.17 per diluted share, as compared to a net loss of $0.9 million, or ($0.09) per diluted share.
Looking ahead, the company expects to continue growing in its next quarter and, for the next fiscal year, it expects top-line growth of some 30%.
This small company is just the kind of business that can do well in a recession, because its products and services are in demand and its customer base is well-heeled. Just at time when government spending is increasing rapidly, you can only imagine that demand for IT security will be solid regardless of what happens in the economy.
As I've written before, the real test for a business is its ability to keep the ship sailing when the business cycle turns. Only a handful of companies are beating consensus expectations right now and even fewer are guiding higher. Small ArcSight is one of those companies and it will be interesting to see how this business develops over the next few years.
Profit Confidential
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