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Topic: Growth Stocks

TERADATA CORP. $43 – New York symbol TDC

TERADATA CORP. $43 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 157.7 million; Market cap: $6.8 billion; Price-to-sales ratio: 2.6; No dividends paid; TSINetwork Rating: Average; www.teradata.com) was a wholly owned subsidiary of NCR Corp. until it was spun off on October 1, 2007. Teradata is up 65% since then.

The company’s technology captures and stores large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends, which helps its clients improve their decision-making.

In the three months ended March 31, 2014, the company’s earnings rose 19.2%, to $87 million from $73 million a year earlier. Teradata spent $86 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 25.6%, to $0.54 from $0.43. Revenue rose 7.0%, to $628 million from $587 million.

Teradata will likely earn $2.64 a share in 2014, well below its earlier prediction of $2.85 to $3.00. The stock trades at 16.3 times the new estimate.

The lower forecast is mainly because businesses are cutting spending on data services in response to the uncertain economy. Strong competition is also making it harder for Teradata to hang on to existing clients and attract new ones.

Teradata is a hold.

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