The IBD SmartSelect Composite Rating for EngageSmart stock increased from 92 to 96 Tuesday. The computer software firm enjoys a Relative Strength Rating of 94. On Monday, EngageSmart shares popped higher as Vista Equity Partners intends to take the firm private in a $4 billion dollar deal. The deal is expected to close around first quarter next year.
The upgrade means the stock currently tops 96% of all other stocks in terms of key performance metrics and technical strength. History shows the top market performers tend to have a 95 or higher score as they launch their major moves.
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Is EngageSmart Stock A Buy?
EngageSmart stock is now out of buy range after breaking out from a 20.59 entry in a cup with handle. Now is not the time to buy the software stock as the acquisition deal will likely close early next year. It would be a good idea to take profits before company goes private.
One weak spot is the company's 41 EPS Rating, which tracks quarterly and annual earnings-per-share growth. Look for that to improve to 80 or better to show it's in the top 20% of all stocks.
Its Accumulation/Distribution Rating of A- shows heavy buying by institutional investors, such as mutual funds and pension funds, over the last 13 weeks.
In Q2, the company posted -25% EPS growth. Top line growth came in at 28%, down from 31% in the prior quarter. The company's next quarterly report is expected on or around Nov. 2.
EngageSmart stock holds the No. 9 rank among its peers in the Computer Software-Enterprise industry group. ServiceNow, UiPath and Workday are among the top 5 highly-rated stocks within the group.
