eGain Stock's Downtrend Could Continue Post-Earnings

Weighing out the risk-reward potential for eGain stock

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eGain Corporation (NASDAQ:EGAN) is a cloud-based software company with its headquarters in Sunnyvale, California. EGAN provides a digital customer engagement platform for customer service, knowledge management, and analytics that businesses use to serve and sell to their customers. eGain's software is powered by AI, machine learning, knowledge, and analytics; providing virtual assistance and a messaging hub to serve customers, reduce cost, and improve compliance. This afternoon, EGAN was last seen down 2.2% at $11.68.

On Aug. 25, eGain announced it will release its fiscal fourth-quarter earnings on Wednesday, September 1. After financials are released, there will be an investor conference call hosted by CEO Ashu Roy and Chief Financial Officer Eric Smit.

EGAN has beat earnings expectations on all four of its most recent earnings reports. For Q4 of fiscal 2020, eGain beat analysts’ estimates by a margin of $0.03, reporting an EPS of $0.08. For Q1 of fiscal 2021, EGAN's EPS remained at $0.08, beating expectations by a margin of $0.02. For Q2 of fiscal 2021, eGain posted a decrease in earnings, dropping to $0.06 per share. However, the software company still beat estimates by a margin of $0.05.For Q3 of fiscal 2021, eGain reported an EPS of $0.05 and beat expectations by a margin of $0.05.

eGain stock has decreased by about 11% in price year-over-year and EGAN is trading down 43% since hitting an almost 20-year high of $20.88 last October. Additionally, shares of EGAN have dropped just below the year-to-date breakeven mark. However, eGain stock is up 37% since its two and a half-year low of $8.51 in early May.

From a fundamental perspective, eGain stock trades at a very high price-earnings ratio of 54.27 despite showing limited growth. In addition, EGAN has a forward price-earnings ratio of 59.52, which means the company is projected to see a decrease on the bottom-line in the coming year.

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