F5(NASDAQ: FFIV) stock gained in Wednesday's daily trading. The company's share price ended the day up more than 2%, according to data from S&P Global Market Intelligence.
After the market closed Tuesday, F5 published results for the fourth quarter of its 2023 fiscal year -- which ended Sept. 30. Sales and earnings performance for the period came in ahead of market expectations and helped to send the software specialist's share price higher.
Why are investors excited about F5's Q4 results?
F5 reported non-GAAP (adjusted) earnings per share of $3.50 on sales of $706.97 million. For comparison, the average analyst estimate had called for per-share earnings of $3.21 on sales of roughly $702.25 million. F5's sales were up roughly 1% year over year in the quarter, and its adjusted earnings per share were up roughly 33.6% compared to the prior-year period.
The company delivered a significant performance beat on both the top and bottom lines. Management's forward guidance also seems to be pleasing investors.
What comes next for F5 stock?
For its next fiscal year, F5 is guiding for sales to come in somewhere between flat and a low-single-digit decline. While that might not sound like a particularly exciting projection, the company is facing caution from customers amid macroeconomic uncertainty -- and its earnings and stock buyback forecasts are more encouraging.
F5 expects to grow adjusted earnings per share somewhere between 5% and 7% on an annual basis. The company also plans to commit at least 50% of its annual free cash flow to repurchasing shares. As the company buys back stock, that will reduce its total number of shares outstanding. In turn, that should create positive catalysts for earnings per share in subsequent years. It may also signal that the company believes that its stock is undervalued at current prices.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
