Aspen Technology Forms Potentially Bullish Pattern Ahead of Earnings

Aspen Technology Forms Potentially Bullish Pattern Ahead of Earnings
  • AspenTech’s weekly chart shows higher lows and lower highs over the past few weeks, ahead of the company’s fiscal first quarter report on Wednesday.
  • Wall Street expects the maker of plant operations and supply chain management software to earn $1.09 per share on revenue of $227.97 million.
  • Emerson Electric’s $6 billion investment helped boost the stock in late 2021 and early 2022 while other tech stumbled.

Enterprise software specialist Aspen Technology (NASDAQ:AZPN) has formed a potentially bullish pennant pattern as it pulls back slightly from its October 6 high of $263.59.

.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; }

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 2022 hedge fund letters, conferences and more

This Odey Fund Is Long On Commodities Stocks And Short On Logistics Properties [Exclusive]

Crispin OdeyCrispin OdeyThe LF Book Absolute Return Fund, overseen by Brook Asset Management under the Odey umbrella, returned -5.6% for the third quarter, bringing its year-to-date return to -9%. In what turned out to be a wild quarter for the financial markets, the MSCI TR Net World Index was up 2% in sterling and down 6.19% in Read More


Find A Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.


Its weekly chart shows a trend of higher lows and lower highs over the past few weeks, ahead of the company’s fiscal first quarter report on Wednesday. Wall Street expects the maker of plant operations and supply chain management software to earn $1.09 per share on revenue of $227.97 million, increasing over the year-earlier quarter.

The bullish pennant can occur as investors take a breather following a big rally before there’s another catalyst, such as earnings. It could potentially send the price higher.

According to MarketBeat earnings data, AspenTech missed revenue expectations in the past three quarters. That didn’t stop investors from piling into the stock, sending it higher in numerous short- and longer-term rolling timeframes. Recent returns are as follows:

  • One month: +12.60%
  • Three months: +39.13%
  • Year-to-date: +66.65%
  • One year: +58.59%

AspenTech is part of the enterprise software sub-industry within the tech sector. It has a market capitalization of $16.64 billion. That qualifies as a large cap, but with so many bigger companies on the market, it’s not yet part of the S&P 500.

It’s part of a somewhat glamorous industry, given that several large enterprise-software peers like Salesforce (NYSE:CRM), ServiceNow (NYSE:NOW), Snowflake (NYSE:SNOW), Shopify (NYSE:SHOP) and Datadog (NASDAQ:DDOG) are all large caps that posted strong run-ups in 2020 and 2021. Those stocks became well-known among growth investors and Aspen remained in stealth mode.

Much of that was due to its smaller market cap. Being a component of the S&P 500 means a stock automatically attracts more institutional investors as funds tracking that index must hold positions commensurate with index weightings.

However, as most stocks in that industry stumbled, Aspen took off. In early 2022, as the broader market and techs were among the biggest decliners, Aspen held steady. The stock traded in a tight range between November 2021 and March of this year, then began rallying in earnest in May.

Aspen’s business itself is somewhat more obscure, another factor in its low profile among tech investors until just a few months ago. The company helps enterprise clients optimize its digital assets to run assets safer, greener, longer and faster.

Aspen TechnologyAspen Technology

Energy and Industrial Customers

Rather than serving prominent techs or consumer-facing businesses, AspenTech has a customer base that includes the chemical and energy industries.

In October of last year, industrial technology and engineering firm Emerson Electric (NYSE:EMR) took a 55% stake in Aspen, with a valuation of $6 billion. That transaction closed in May. Two Emerson software units were wrapped into AspenTech.

The Emerson deal will also help Aspen make inroads in new industries like pharmaceuticals and expand into China.

Aspen has had an uneven earnings and revenue growth history. In the past four quarters, revenue results ranged from a year-over-year decline of 64% to a year-over-year gain of 209%.

Its three-year revenue growth rate of -8% reflects that uneven performance.

Irregular Earnings Growth Rates

Earnings have also grown at irregular rates. The company has been profitable for years, but earnings fell in 2020, from $4.11 per share to $3.78 per share. Its three-year earnings growth rate is -6%.

Despite that negative growth rate, Wall Street expects more going forward. Analysts see earnings coming in at $6.77 per share for fiscal 2023, a gain of 49%. In fiscal 2023, it has risen another 13% to $7.62 per share.

According to MarketBeat analyst data, the consensus rating on the stock is “moderate buy.” Because of the strong recent run-up, a pullback could happen in the not-so-distant future as investors pocket profits. It’s always wise to wait for an earnings release as is the case with AspenTech.

Should you invest $1,000 in Aspen Technology right now?

Before you consider Aspen Technology, you’ll want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Aspen Technology wasn’t on the list.

While Aspen Technology currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

Article by Kate Stalter, MarketBeat

Comments are closed.