Why Teradata Corporation Stock Popped Today

By Steve Symington Markets Fool.com

What happened

Continue Reading Below

Shares of Teradata Corporation (NYSE: TDC) were up 9.6% as of 12:15 p.m. EST Thursday after the data warehouse platform, software, and services specialist announced stronger-than-expected fourth-quarter 2016 earnings.

So what

Quarterly revenue declined 13% year over year (12% at constant currency), to $626 million. That translated to adjusted net income of $89 million, or $0.67 per diluted share, down from $101 million, or $0.75 per share in last year's fourth quarter. To be fair, Teradata's fourth-quarter of 2015 also included $39 million of revenue from its marketing applications business, which was sold on July 1, 2016.

Analysts, on average, expected Teradata to report slightly higher revenue of $628.4 million but lower adjusted earnings of $0.60 per share.

Image source: Teradata.

Continue Reading Below

Now what

As CEO Victor Lund said:

Entering 2017, theTeradatateam continues its steady execution on our strategic initiatives. Our customers tell us thatTeradatais becoming more responsive to their wants and needs while helping them gain business value from their analytics. This indicates we are effectively calibrating our customer engagements -- providing more choices, more innovation, more expertise, and more reasons to rely on us. While we have work ahead of us, I have confidence that we are on the right track as the global demand for big data analytics solutions and services continues to rise.

Teradata also noted that because it is now offering subscription license programs for its core analytic offerings as part of its ongoing business transformation, which was originally outlineda little over a year ago,"it is difficult to estimate how much full-year 2017 reported revenue could be impacted by the change." As such, it isn't providing full-year 2017 guidance until it has more clarity.

In the meantime, Teradata anticipates first-quarter 2017 revenue to be roughly $500 million, which should result in adjusted earnings per share of $0.25 to $0.30. Analysts' consensus estimates called for Q1 earnings well within that range, at $0.32 per share, on lower revenue of $486.5 million.

All things considered, this was a solid quarter for Teradata as it continues to implement transformation. Given Teradata's relative bottom-line outperformance in Q4 and strong guidance, it's no surprise to see shares trading higher today.

10 stocks we like better than Teradata
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Teradata wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Teradata. The Motley Fool has a disclosure policy.