ePlus (NASDAQ:PLUS) Q2 Earnings: Leading The IT Distribution & Solutions Pack

What Happened?

A number of stocks jumped in the afternoon session after markets continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• IT Distribution & Solutions company ePlus jumped 3%. Is now the time to buy ePlus? Access our full analysis report here, it’s free.
• IT Distribution & Solutions company ScanSource jumped 4.7%. Is now the time to buy ScanSource? Access our full analysis report here, it’s free.
• Data & Business Process Services company TransUnion jumped 4.5%. Is now the time to buy TransUnion? Access our full analysis report here, it’s free.
• Digital Media & Content Platforms company Vimeo jumped 6.3%. Is now the time to buy Vimeo? Access our full analysis report here, it’s free.
• IT Services & Consulting company Accenture jumped 3.2%. Is now the time to buy Accenture? Access our full analysis report here, it’s free.

Zooming In On Vimeo (VMEO)

Vimeo’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 8 days ago when the stock gained 8% on the news that the company reported strong second-quarter earnings that far surpassed analyst expectations. The video platform posted a profit of $0.04 per share, which was a significant beat compared to the loss Wall Street had anticipated. While total revenue was nearly flat year-over-year, investors latched onto key growth metrics. The company announced a 6% rise in total bookings, its highest in three years, driven by a 25% jump in revenue from its enterprise segment. This robust performance from corporate clients offset a decline in self-serve subscribers. Based on these results, Vimeo raised its full-year adjusted EBITDA guidance to $35 million.

Vimeo is down 37.2% since the beginning of the year, and at $4.07 per share, it is trading 44.4% below its 52-week high of $7.32 from December 2024. Investors who bought $1,000 worth of Vimeo’s shares at the IPO in May 2021 would now be looking at an investment worth $74.00.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

The stocks in this article have caught Wall Street’s attention in a big way, with price targets implying returns above 20%. But investors should take these forecasts with a grain of salt because analysts typically say nice things about companies so their firms can win business in other product lines like M&A advisory.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.

Hyster-Yale Materials Handling (HY)

Consensus Price Target: $50 (34.8% implied return)

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale designs, manufactures, and sells materials handling equipment to various sectors.

Why Are We Out on HY?

• Flat sales over the last two years suggest it must find different ways to grow during this cycle
• Projected sales decline of 6.9% for the next 12 months points to an even tougher demand environment ahead
• Issuance of new shares partly offset its revenue growth over the last five years as its earnings per share were flat

Hyster-Yale Materials Handling’s stock price of $37.08 implies a valuation ratio of 5.9x forward EV-to-EBITDA. To fully understand why you should be careful with HY, check out our full research report (it’s free).

PAR Technology (PAR)

Consensus Price Target: $81.75 (70.3% implied return)

Originally founded in 1968 as a defense contractor for the U.S. government, PAR Technology provides cloud-based software, payment processing, and hardware solutions that help restaurants manage everything from point-of-sale to customer loyalty programs.

Why Are We Hesitant About PAR?

• Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
• Negative returns on capital show that some of its growth strategies have backfired
• Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

PAR Technology is trading at $48 per share, or 129.9x forward P/E. Read our free research report to see why you should think twice about including PAR in your portfolio.

ePlus (PLUS)

Consensus Price Target: $92 (27.6% implied return)

Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.

Why Do We Pass on PLUS?

• Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
• Projected sales growth of 3.2% for the next 12 months suggests sluggish demand
• Earnings per share have contracted by 6.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

At $72.11 per share, ePlus trades at 14x forward EV-to-EBITDA. If you’re considering PLUS for your portfolio, see our FREE research report to learn more.

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What Happened?

A number of stocks jumped in the afternoon session after a key inflation report met expectations, bolstering hopes for a Federal Reserve interest rate cut, while a separate report indicated rising optimism among small businesses. The July Consumer Price Index (CPI) report showed annual inflation holding steady at 2.7%, aligning with forecasts and increasing the probability of a Federal Reserve interest rate cut to over 94%. Lower interest rates can stimulate the economy by making it cheaper for businesses to borrow and invest.

Further boosting confidence, the National Federation of Independent Business (NFIB) Small Business Optimism Index rose to a five-month high. This is a crucial indicator for the Business Services sector, as many of its companies cater to small and medium-sized enterprises. The combined positive data fueled a broad, "risk-on" sentiment, where investors favor economically sensitive sectors, leading to gains across IT services, staffing, and manufacturing.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Professional Staffing & HR Solutions company First Advantage jumped 3.9%. Is now the time to buy First Advantage? Access our full analysis report here, it’s free.
• IT Distribution & Solutions company Insight Enterprises jumped 4%. Is now the time to buy Insight Enterprises? Access our full analysis report here, it’s free.
• IT Distribution & Solutions company ePlus jumped 3.3%. Is now the time to buy ePlus? Access our full analysis report here, it’s free.
• IT Distribution & Solutions company ScanSource jumped 3.6%. Is now the time to buy ScanSource? Access our full analysis report here, it’s free.
• Professional Staffing & HR Solutions company Robert Half jumped 3.2%. Is now the time to buy Robert Half? Access our full analysis report here, it’s free.

Zooming In On Insight Enterprises (NSIT)

Insight Enterprises’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

Insight Enterprises is down 14% since the beginning of the year, and at $128.52 per share, it is trading 42.8% below its 52-week high of $224.73 from October 2024. Investors who bought $1,000 worth of Insight Enterprises’s shares 5 years ago would now be looking at an investment worth $2,319.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

What Happened?

Shares of IT solutions provider ePlus jumped 10.1% in the morning session after the company reported strong second-quarter 2025 results that significantly beat Wall Street's expectations for both revenue and profit. The company posted revenue of $637.3 million, up 17% year-on-year, which easily surpassed the analyst consensus of $516.7 million. The outperformance was even more pronounced on the bottom line, with GAAP earnings per share (EPS) of $1.43. This result was 55.4% higher than the consensus estimate of $0.92 and marked a substantial increase from the $1.02 reported in the same quarter of the previous year. This significant beat on key financial metrics demonstrated strong operational performance and boosted investor confidence.

Is now the time to buy ePlus? Access our full analysis report here, it’s free.

What Is The Market Telling Us

ePlus’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for ePlus and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock dropped 3.1% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.

ePlus is down 5.9% since the beginning of the year, and at $69.60 per share, it is trading 31.5% below its 52-week high of $101.67 from October 2024. Investors who bought $1,000 worth of ePlus’s shares 5 years ago would now be looking at an investment worth $1,780.

IT solutions provider ePlus reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 17% year on year to $637.3 million. Its GAAP profit of $1.43 per share was 55.4% above analysts’ consensus estimates.

Is now the time to buy ePlus? Find out by accessing our full research report, it’s free.

ePlus (PLUS) Q2 CY2025 Highlights:

• Revenue: $637.3 million vs analyst estimates of $516.7 million (17% year-on-year growth, 23.3% beat)
• EPS (GAAP): $1.43 vs analyst estimates of $0.92 (55.4% beat)
• Adjusted EBITDA: $46.7 million vs analyst estimates of $43.15 million (7.3% margin, 8.2% beat)
• Operating Margin: 5.7%, in line with the same quarter last year
• Market Capitalization: $1.67 billion

"Fiscal 2026 is off to a strong start both financially and strategically. We reported double digit growth across key financial metrics, including revenue, gross profit, and earnings per share. Our services business continues to be a standout, increasing nearly 50% in the quarter," commented Mark Marron, president and CEO of ePlus.

Company Overview

Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $2.16 billion in revenue over the past 12 months, ePlus is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, ePlus’s 7.4% annualized revenue growth over the last five years was solid. This shows it had high demand, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. ePlus’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, ePlus reported year-on-year revenue growth of 17%, and its $637.3 million of revenue exceeded Wall Street’s estimates by 23.3%.

Looking ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

ePlus’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 7.3% over the last five years. This profitability was paltry for a business services business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, ePlus’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, ePlus generated an operating margin profit margin of 5.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

ePlus’s EPS grew at a remarkable 11.1% compounded annual growth rate over the last five years, higher than its 7.4% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For ePlus, its two-year annual EPS declines of 4.7% mark a reversal from its (seemingly) healthy five-year trend. We hope ePlus can return to earnings growth in the future.

In Q2, ePlus reported EPS at $1.43, up from $1.02 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from ePlus’s Q2 Results

We were impressed by how significantly ePlus blew past analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 4% to $66.01 immediately following the results.

ePlus may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.