SPS Commerce is the IBD Stock Of The Day as the supply chain management software provider is showing strength in a turbulent market. SPSC stock is trading in a buy zone.
On Feb. 10, SPSC stock broke out of a cup base at a buy point of 146.91, according to IBD MarketSmith charts. The buy zone extends to 154.26. However, if the breakout fails, the stop-loss sell zone starts at 136.63.
On the stock market today, SPSC stock fell 2.3% to close at 146.66.
Late on Feb. 9, SPS Commerce reported better-than-expected results for the fourth quarter. The Minneapolis-based company earned an adjusted 63 cents a share, up 37% year over year, on sales of $122 million, up 19%, in the December quarter. Meanwhile, analysts polled by FactSet had expected earnings of 54 cents a share on sales of $120.8 million.
The company has delivered accelerating sales and earnings growth for the past two quarters.
Supply Chain Complexity Increasing
SPS Commerce provides internet cloud-based software that connects retail trading partners. It offers services to optimize supply chain operations for companies in retail, grocery, distribution, supply and logistics.
"The ongoing transition to omnichannel in retail and increasing complexity in supply chain management continue to fuel the need for automation," SPS Commerce Chief Executive Archie Black said on a conference call with analysts.
For the current quarter, SPS Commerce predicts adjusted earnings of 57 cents a share on sales of $123.8 million, based on the midpoint of its outlook. Further, that would translate to year-over-year growth of 4% in earnings and 18% in sales.
For full-year 2023, SPS Commerce sees adjusted earnings of $2.66 a share on sales of $524.5 million. Also, that would translate to year-over-year growth of 13% in earnings and 16% in sales.
SPSC Stock On Tech Leaders List
"We continue to be impressed with the company's consistent execution and playbook to keep delivering shareholder value over the long-term," Needham analyst Scott Berg said in a recent note to clients. "As one of the most recession-resilient companies in our SaaS (software-as-a-service) universe, SPS is seeing little-to-zero macro impact."
Berg rates SPSC stock as buy with a price target of 160.
William Blair analyst Matthew Pfau said SPS Commerce is well positioned to meet or exceed its 2023 targets. Also, he has a market perform rating on SPSC stock.
"The supply chain software segment seems to be more insulated from macro pressure vs. other areas of technology," Pfau said in a note. "Further, supply chain digitization tailwinds should continue for several years, benefiting SPS Commerce's growth."
SPSC stock is tied for first place with Ceridian in IBD's specialty enterprise software industry group, according to IBD Stock Checkup. Both stocks have a best-possible IBD Composite Rating of 99.
Meanwhile, SPSC stock and Ceridian are on the IBD Tech Leaders list.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
