Earnings Cheat Sheet: Resurgent Sales Boost Shares Of DemandTec Inc. (DMAN) 13.5%

Earnings: Q2 profits excluding items of $0.02 vs. estimates of ($0.01) and $0.02 in Q2 last year.

Revenue: Up 3% YoY to $20.4 million vs. estimates of $19.6 million.

“We are seeing a more consumer-centric philosophy among the best global retailers as they face the challenging task of retaining their best shoppers and attracting new ones,” said Dan Fishback, President and Chief Executive Officer of DemandTec.

Fishback added that, “our financial results in the quarter reflect how nextGEN can facilitate a greater collaboration between retailers and their ecosystem of trading partners to help our customers meet these challenges.”

Comment: DemandTec Inc. (NASDAQ: DMAN) provides on-demand optimization solutions to retailers and consumer products companies.  DMAN’s software services enable its clients to separately or collaboratively define category, brand, and customer strategies based on a scientific understanding of consumer behavior for the purpose of making actionable pricing, promotion, assortment, space and other merchandising and marketing decisions.

After bouncing around under $10 for the past year and change, shares of DMAN have finally broken back into double digits, assisted by narrowing charge-offs and core sales numbers that came in ahead of expectations.  Shares rose as much as 16% following the report, finally settling for a 13.5% gain, closing the week at $10.68.  2012 earnings are now forecasted to come in at $0.15 vs. 2011 earnings of just $0.003, prompting an analyst at Raymond James to raise his price target to $12 while maintaining an Outperform rating.

Like many other hot software names these days, DMAN delivers its applications by means of a software-as-a-service (SaaS) model, allowing it to capture and analyze the most recent retailer and market-level data, enhance its software services to address its customers’ merchandising and marketing needs, and connect retailers and consumer products companies via collaborative, Internet-based applications.

From a technical perspective, DMAN’s breakout may be significant.  Shares broke above $10 for the first time since June ’09 and are just $0.32 shy of $11, a mark shares haven’t hit since January ’08.  If DMAN can push through next-resistance, it won’t hit another resistance area until the $13.80 range, or 30% above Friday’s close.  It might take another quarter or two before we know for sure whether DMAN is back or not, but if you’re looking for a potential alpha-producer, DMAN is definitely worth a gander.

Disclosure: No holdings in DMAN.

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