Computer Task Group Earnings: Here’s Why Investors are Not Excited Now

Computer Task Group Inc. (NASDAQ:CTGX) delivered a profit and met Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 4.37%.

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Computer Task Group Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 20% to $0.24 in the quarter versus EPS of $0.20 in the year-earlier quarter.

Revenue: Rose 6.92% to $107.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Computer Task Group Inc. reported adjusted EPS income of $0.24 per share. By that measure, the company met the mean analyst estimate of $0.24. It missed the average revenue estimate of $109 million.

Quoting Management:“CTG closed out another excellent year with a very strong fourth quarter highlighted by earnings per share, excluding the one-time gain, at the top of guidance and up 20%, an operating margin of 5.9%, and further growth of our healthcare business to one-third of total revenue,” said CTG Chairman and Chief Executive Officer James R. Boldt. “For the quarter, we again delivered significant growth in earnings and margins, along with a continued shift in our business mix to more profitable solutions work which was 42% of revenue. As expected, client concerns about domestic and global economic uncertainty are muting growth in our less profitable staffing business which was up 3.4% in the quarter and 0.7% in 2012. The 18% increase in healthcare IT revenue to 33% of 2012 revenue was the primary driver of the increases in solutions work and CTG’s revenue and earnings last year.”

Key Stats (on next page)…

Revenue increased 1.39% from $106.42 million in the previous quarter. EPS increased 4.35% from $0.23 in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.25 and has not changed. For the current year, the average estimate is a profit of $0.90, which is the same with that ninety days ago.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at]