Altair Engineering (ALTR) is the IBD Stock Of The Day. The engineering software company, which recently had its initial public offering, is nearing a buy point after forming a cup-with-handle chart pattern.
XAltair late Thursday said it earned 5 cents a share in the second quarter as revenue rose 17% to $95.6 million, topping expectations. Analysts had projected a 4-cent profit and revenue of $91.6 million. A year earlier, Altair had a profit of 8 cents on revenue of $81.6 million.
While Altair provides engineering services, sell-side analysts have focused on software growth. In the second quarter, software revenue rose 22% to $72.8 million, slowing from the previous quarter. In the first quarter, software revenue rose 26% to $68.1 million.
Altair stock gained 3.6% to close at 36.54 on the stock market today. Shares were unchanged in after-hours trading.
The company went public at 13 on Nov. 1. The IPO raised $144 million. Altair stock rose 177% though mid-May. Since then it's been forming a tight base, a bullish chart pattern.
Altair Stock Pops On Earns
Altair stock popped 7% on May 15 after the consultant-and-services company reported first-quarter earnings that topped views. Revenue rose 19% to $91.7 million. Adjusted profit climbed to 8 cents a share from 3 cents a share a year earlier, the company said.
With its IPO proceeds, Altair in May acquired FluiDyna as well as assets of Candi Controls.
Trading volume increased after Altair announced a secondary offering, priced at 35 a share on June 7. The follow-on offering, which raised $140 million, closed June 11. Shares have clawed back amid increased liquidity, nearing a technical buy point of 37.31 heading into second-quarter earnings.
Founded in 1985, Altair has pushed into computer-aided design software. It competes with Autodesk (ADSK), Ansys (ANSS) and Dassault Systemes. Altair has focused on simulation design tools, analysts say.
Altair Focuses On Simulation
"One of the most impactful trends in the space is the emergence of simulation-driven design as companies increasingly use simulation software earlier in the product development cycle rather than running simulation after the design phase of the cycle," William Blair analyst Bhavan Suri said in a recent note to clients.
Suri added: "We believe this trend should continue to increase over time as companies try to reduce cycle times, get products to market faster, and increase product quality with lower costs. Altair's broad product portfolio positions it well to capitalize on these market trends."
Altair also sells predictive analysis and optimization software.
Autos Are Key For Altair Earnings
"The automotive market continues to be key and the heaviest users of Altair software, but electronics, energy and aerospace all showed solid Q1 billings growth as well," said Sterling Auty, a JPMorgan analyst in a May report."
The JPMorgan analyst added: "What makes today's environment so ripe for simulation to grow is that the cost to compute has come down dramatically, which makes the simulate-vs.-physical-test cost-benefit analysis even more pronounced."
Altair belongs to IBD's Computer-Software Specialty Enterprise group. It's ranked No. 15 out of 197 industry groups.
SPS Commerce (SPSC), RealPage (RP) and Alarm.com (ALRM) have the highest Composite Ratings in the group.
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The post IBD Stock Of The Day: Recent IPO Altair Bets On Simulation Tools appeared first on Investor's Business Daily.
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