TERADATA CORP. $43 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 163.1 million; Market cap: $7.0 billion; Price-to-sales ratio: 2.8; No dividends paid; TSINetwork Rating: Average; www.teradata.com) makes computers and software that capture and store large amounts of a business’s data, including its sales and inventory. It then analyzes this information and identifies buying habits and trends, which helps its clients make better decisions.
In the three months ended June 30, 2013, the company’s earnings fell 4.5%, to $126 million from $132 million a year earlier.
Teradata spent $91 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 1.3%, to $0.76 from $0.77.
The lower earnings are partly because Teradata hired more salespeople. It also raised its research spending to 7.0% of revenue from 6.5% a year earlier.
Revenue rose 0.8%, to $670 million from $665 million. Revenue in the Americas region (60% of the total) gained 1.8%, mainly because the company closed several large contracts in the U.S. Due to the higher value of the U.S. dollar, revenue from its international operations (40%) fell 0.8%.
Teradata now expects its revenue for all of 2013 to be unchanged from 2012. If you disregard currency rates, revenue will probably rise 1% to 2%.
The company also expects to earn $2.70 to $2.80 a share in 2013. That’s down from its earlier forecast of $3.05 to $3.20. The stock trades at 15.6 times the midpoint of the new range.
The company is in a strong position to profit as more businesses aim to boost sales by analyzing their data. Many of these clients lack the computers and software to capture the necessary information, so they must turn to companies like Teradata. However, Teradata is facing rising competition from bigger competitors like IBM and Oracle.
Teradata is a hold.
