What Happened:

Shares of supply chain optimization software maker Manhattan Associates (NASDAQ:MANH) fell 9.7% in the morning session after the company reported first quarter results and provided underwhelming guidance for the next quarter, which was roughly in line with analysts' expectations, with management citing macroeconomic volatility in its end markets.

On the other hand, Manhattan Associates beat analysts' revenue and EPS expectations during the quarter, driven by strong performance in its subscription and services segments. Looking ahead, it lifted its full-year revenue guidance, which came in higher than Wall Street's estimates. Overall, it was a mixed quarter for the company, with the market likely worried about the cautious macro comments.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Manhattan Associates? Access our full analysis report here, it's free.

What is the market telling us:

Manhattan Associates's shares are somewhat volatile and over the last year have had 3 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 12 months ago, when the company gained 13.6% on the news that the company reported an impressive 'beat-and-raise' quarter. Revenue and profitability in the quarter surpassed analysts' expectations. Revenue and EPS guidance for the current year were raised by 4% and 7.5%, respectively, and the updated guidance topped Consensus estimates. Stocks generally follow the direction of earnings estimates, so this quarter's earnings and raised guidance should result in broad increases in financial projections for the company.

Manhattan Associates is up 0.2% since the beginning of the year, but at $207.08 per share it is still trading 22.2% below its 52-week high of $266.03 from March 2024. Investors who bought $1,000 worth of Manhattan Associates's shares 5 years ago would now be looking at an investment worth $3,094.

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.