IHS tops Q2 estimates, reiterates FY16 guidance
Last week, the fiscal 2016 second-quarter results reported by the business research provider IHS Inc. (IHS) propelled its share price from a low of $107.85 to a high of $117.36.
The earnings and revenue also exceeded the analysts’ estimates. Still, we believe that fundamentally the share price would go up further due to the reasons discussed underneath.
The second-quarter revenue rose 6% to $588 million, from $556.94 million in the similar period last year. The revenue estimate of Wall Street analysts for the second-quarter was $587.4 million.
During the second-quarter, the Resources segment reported a 6% decline in revenue to $221 million. However, it was compensated by the Transportation segment that reported a 21% increase in revenue to $231 million. The Consolidated Markets &
IHS Jane’s
Solutions segment recorded a 3% rise in the revenue to $136 million. For the quarter ended May 2016, IHS reported net income of $50.10 million or $0.74 per share, compared to $50.95 million or $0.74 per share in the second-quarter of 2015. Excluding other charges, the adjusted income posted by the Englewood, Colorado-based company was $108.30 million or $1.60 per share, up from $95.15 million or $1.38 per share in the year-ago corresponding quarter. The adjusted income was above the analysts’ estimates of $1.47 per share.
For the fiscal 2016, IHS anticipates revenue at the lower end of its prior guidance in the range of $2.30 billion to $2.38 billion. However, the company expects the fiscal 2016 earnings per share to remain at the high end of the prior outlook between $6 and $6.30. As of May 2016, the cash and cash equivalents of the company increased to $345.54 million, from $291.58 million in the year-ago corresponding quarter. As more and more companies look for a way to mitigate risk, the demand for comprehensive research reports can be expected only to increase. Thus, fundamentally, the company is poised for a revenue growth and correspondingly a rise in the share price.
Technically, the stock has bounced off the support at 110. On the upside, resistance exists at 123. The RSI indicator has firmly crossed above the reading of 50. The share price is also trading above the 50-day moving average. Thus, we can expect the price to rise further and even break the resistance.
So, to profit from the impending uptrend in the share price, a binary trader should trade a one touch call option through a broker of choice. The suggested target price for the call option is $123 or lower. Similarly, a three week time period should be allowed for the contract to expire.
