Dj Dir Theis Registers 1457 Of Ringcentral Inc >Rng

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

While good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum Score

Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: RingCentral (RNG)

RingCentral is a leading provider of contact center software-as-a-service (SaaS) solutions, along with global enterprise cloud communications, video meetings, collaboration, and customer engagement solutions that enable businesses to communicate, collaborate, and connect.

RNG is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. RNG has a Growth Style Score of A, forecasting year-over-year earnings growth of 13.9% for the current fiscal year.

Six analysts revised their earnings estimate upwards in the last 60 days for fiscal 2024. The Zacks Consensus Estimate has increased $0.03 to $3.68 per share. RNG boasts an average earnings surprise of 4.8%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, RNG should be on investors' short list.

Zacks Investment Research

RingCentral RNG reported third-quarter 2024 non-GAAP earnings of 95 cents per share, beating the Zacks Consensus Estimate by 3.26% and increasing 21.8% year over year.

RNG’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 4.60%, on average.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net revenues of $608.8 million comfortably beat the consensus mark by 1.14% and increased 9.1% year over year. A robust product portfolio and strong subscription revenues drove the upside.

Ringcentral, Inc. Price, Consensus and EPS Surprise

Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote

What Should You Expect From RNG Shares Post Q3 Earnings?

RingCentral shares were down 3.32% in the pre-market trading.

RNG shares have returned 11.9% year to date (YTD), underperforming the Zacks Computer & Technology sector’s 28.5%.

RingCentral shares have outperformed the Zacks Internet Software-Services industry and peers, including Okta OKTA, Donnelley Financial DFIN and Sabre SABR.

YTD, shares of Donnelley Financial have returned 0.1%, while Okta and Sabre shares have fell 14.7% and 20.2%, respectively. The industry fell 6.5% over the same timeframe.

RNG raised earnings guidance for 2024, which bodes well for investors. It is benefiting from continued momentum with new products, specifically RingCX, and a strong market position in its core UCaaS market.

RNG’s Software Subscriptions Rises Y/Y

Software subscription revenues (95.8% of total revenues) increased 9.8% year over year to $583 million.

Other revenues (4.2% of total revenues) decreased 4.9% year over year to $25.8 million.

Annualized Exit Monthly Recurring Subscriptions (ARR) increased 9% year over year to $2.48 billion. Enterprise ARR increased 11% year over year to $1.07 billion.

RNG’s Operating Details

The third-quarter 2024 non-GAAP gross margin contracted 120 basis points (bps) from the year-ago quarter’s tally to 76.9%.

On a non-GAAP basis, research & development expenses increased 11.9% year over year to $62.3 million. Sales and marketing expenses increased 3.1% to $237.4 million.

General and administrative expenses fell 6.7% year over year to $40.6 million in the reported quarter.

The non-GAAP operating margin expanded 190 bps from the year-ago quarter to 21%.

RNG’s Balance Sheet and Cash Flow Remain Strong

As of Sept. 30, 2024, cash and cash equivalents were $213 million compared with $199 million as of June 30, 2024.

Cash flow from operations was $127 million in the third quarter, unchanged sequentially.

Non-GAAP free cash flow was $105 million compared with $109 million reported in the previous quarter. The non-GAAP cash flow margin was 17.3% in the second quarter.

In the third quarter of 2024, RNG bought shares worth $83 million. The current remaining repurchase authorization is $243 million.

RNG Offers Positive Guidance for 2024

For 2024, RingCentral expects revenues between $2.397 billion and $2.399 billion, indicating 9% growth over 2023.

Subscription revenues for 2024 are expected between $2.295 billion and $2.399 billion, indicating 9% growth over 2023.

The non-GAAP operating margin is expected to be 21% for 2024.

Earnings are expected to be $3.69 per share, better than the previous guidance of $3.62-$3.67 per share range.

For the fourth quarter of 2024, RingCentral expects revenues between $611 million and $613 million, indicating year-over-year growth of 7%.

Subscription revenues for the fourth quarter are expected to be between $587 million and $589 million, indicating year-over-year growth between 7% and 8%.

The non-GAAP operating margin is expected to be 21.2% in the fourth quarter of 2024. Earnings are expected to be 96-97 cents per share.

Zacks Rank

Currently, RingCentral has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research