CSG Systems International, Inc. (CSGS), the customer management software provider, saw revenue climb 9% after completing two key acquisitions. CSGS has surprised on estimates 4 quarters in a row by an average of 7.96%.

Company Description

CSG Systems International provides software and services that help clients engage and transact business with their customers. The solutions include customer management and billing solutions. CSG’s customers include cable and direct broadcast satellite companies, financial services, healthcare and utility companies.

CSG’s products reach more than half of all U.S. households each month.

Revenue Jumped 9% in the First Quarter

On Apr 28, CSG Systems reported solid first quarter results that surprised on analysts’ estimates by 8.82%.

The company managed to grow revenue by 9% to $123.5 million from $113.6 million in the year ago period due to the acquisitions of the DataProse and Quaero businesses in the last 12 months.

Net income was 37 cents down 2 cents from the year ago period mainly due to the impact of the two acquisitions. Analysts expected 34 cents.

“We continue to increase our market share within the cable sector with planned conversions of over three million subscribers onto our Advanced Convergent Platform during the next 12 months,” said Peter Kalan, President and CEO.

2009 Guidance Raised

The company is optimistic about 2009 as it revised its guidance to slightly higher than its previous forecast.

Full year 2009 earnings per share are now expected between $1.50 and $1.56 on revenue in the range of $488 to $498 million.

Consensus Estimates Jump

Given the bullish guidance and solid first quarter, covering analysts moved to raise estimates for the second quarter and the full year.

Second quarter consensus estimates rose 3 cents to 36 cents in the last month. Full year consensus estimates increased 9.6% to $1.48 from $1.35 per share in the last month.

Value Fundamentals

CSG Systems International is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 8.6. Its price-to-book is 2.75. The company also has a stellar 5-year return on equity (ROE) of 26.83%.

Zacks Investment Research
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