Kenexa Corp - Aggressive Growth

Kenexa Corp.

 (KNXA) has been busy the past 2 weeks. An earnings surprise, an acquisition, and a major deal with a new customer have led to upward estimate revisions and landed KNXA amongst the Zacks #1 Rank (Strong Buy) stocks. 

Company Description

Kenexa provides software and services that help companies recruit and retain employees. HR solutions focus on employee assessments, compensation, recruitment, leadership and other areas.

Positive Earnings Surprise

On Nov 2 Kenexa reported third-quarter results that showed 52% increase in total revenues, to $77.2 million. There were several areas of growth, but the recruitment services are the majority of the business and had a record quarter.

Earnings per share came in at $0.17, 2 cents higher than the Zacks Consensus Estimate. Kenexa has now topped forecasts in 5 of the past 6 quarters.

Kenexa wrapped up the quarterly report with higher guidance for the rest of the year.

Estimates Move Higher

Analysts raised full-year estimates to account for the surprise and then another penny due to an optimistic outlook. The Zacks Consensus Estimates for 2011 is up 3 cents, to $0.59.

Next year's average forecast rose 4 cents, to $0.82. Given the $0.44 earned in 2010 the projected growth rates stand at an impressive 34% and 39%, respectively.

M&A and News

In the past week Kenexa has made a few headlines as well. On Nov 14 the company announced the acquisition of Batrus Hollweg, a talent management solutions company that focuses on hospitality. The deal was paid for with $11.5 million in cash.

Just yesterday Kenexa announced a 5-year engagement with Eli Lilly (LLY).

The ChartAC

Shares have been surging lately, which has led to lofty valuations. But, if the estimates keep improving the stock could keep going in the short term.