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Atlassian (TEAM) Dips More Than Broader Markets: What You Should Know

·3 min read

Atlassian (TEAM) closed the most recent trading day at $232.42, moving -1.28% from the previous trading session. This change lagged the S&P 500's daily loss of 1.07%. At the same time, the Dow lost 1.07%, and the tech-heavy Nasdaq lost 0.06%.

Coming into today, shares of the company had gained 2.18% in the past month. In that same time, the Computer and Technology sector lost 5.41%, while the S&P 500 lost 3.49%.

Atlassian will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.38, down 17.39% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $801.55 million, up 30.54% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.54 per share and revenue of $3.56 billion. These totals would mark changes of -8.88% and +27.06%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Atlassian. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 4.7% lower within the past month. Atlassian is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Atlassian is currently trading at a Forward P/E ratio of 153.21. This represents a premium compared to its industry's average Forward P/E of 41.45.

Investors should also note that TEAM has a PEG ratio of 7.66 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 2.44 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 137, putting it in the bottom 46% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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