Is Trending Stock CrowdStrike (CRWD) a Buy Now?

Crowd Strike Holdings (CRWD) has recently been one of the most searched stocks on Zacks.com. So, you might want to look at some of the facts that could shape the stock’s performance in the near term.

Shares of this cloud-based security company have returned +3.6% over the past month, compared to a -1.7% change in the Zacks S&P 500 Composite. The Zacks Internet – Software industry, to which CrowdStrike belongs, has lost 2.2% over the period. Now the important question is: Where can the stock go in the near term?

While media releases or rumors about a significant change in a company’s business prospects usually ‘trend’ its stock and lead to immediate price changes, there are always some underlying facts that ultimately lead to buying and dominate the decision to hold.

Here at Zacks, we prefer to gauge the change in a company’s future earnings estimates over anything else. This is because we believe that the present value of his future earnings determines the fair value of his stock.

We primarily look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates for a company go up, the fair value of its stock goes up. A fair value higher than the current market price makes investors interested in buying the stock, which increases its value. This is why empirical research shows a strong correlation between earnings estimate revisions and trends in near-term stock price movements.

For the current quarter, CrowdStrike is expected to post earnings of $0.85 per share, which represents a change of -10.5% from the year-ago quarter. The Zacks Consensus Estimate was unchanged over the past 30 days.

For the current fiscal year, the consensus revenue estimate is $3.73 points, a change of +20.7% from last year. Over the past 30 days, this estimate has remained unchanged.

For the next fiscal year, the consensus revenue estimate of $4.36 represents a change of +16.8% from what CrowdStrike reported a year ago. Over the past month, estimates have remained unchanged.

With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rank — is a more definitive indicator of a stock’s near-term price performance, as it effectively controls the power of revisions to earnings estimates. uses from The size of the recent change in consensus estimates, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for CrowdStrike.

The chart below shows the evolution of the company’s forward 12-month consensus EPS estimates:

Although revenue growth is the highest indicator of a company’s financial health, it is nothing if a business is unable to grow its revenue. After all, it is almost impossible for a company to grow its revenue over a long period of time without growing its revenue. Therefore, it is important to know the potential revenue growth of the company.

In CrowdStrike’s case, the consensus sales estimate of $1.03 billion for the current quarter indicates a year-over-year change of +22.3%. Estimates of $3.93 billion and $4.74 billion for the current and next fiscal years indicate changes of +28.6% and +20.7%, respectively.

CrowdStrike reported revenue of $1.01 billion in the last reported quarter, representing a year-over-year change of +28.5%. EPS of $0.93 for the same period compares to $0.82 a year ago.

The reported revenue represented a +2.84% surprise, compared to the Zacks Consensus Estimate of $982.26 million. EPS surprise was +14.81%.

The company beat consensus EPS estimates in each of the last four quarters. The company has topped consensus earnings estimates every time in the period.

Without considering stock valuation, no investment decision can be made effectively. In predicting a stock’s future price performance, it is critical to determine whether its current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects.

Comparing a company’s current price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) ratios to its historical values helps determine whether Its stock is undervalued, overvalued or undervalued, while comparing the company to its peers on these parameters gives a good idea of how reasonable it is. is the stock price.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which measures both traditional and unconventional valuations) organizes stocks into five groups from A to F (Better than AB; BC is better; etc.), this is helpful in identifying whether a stock is overvalued, correctly valued, or temporarily undervalued.

CrowdStrike is rated F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

The facts discussed here and many other information on Zacks.com can help determine whether or not the market buzz about CrowdStrike is worth paying attention to. However, its Zacks Rank #3 suggests it may perform in line with the broader market in the near term.

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