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Cloudflare (NET) Gains But Lags Market: What You Should Know

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Cloudflare (NET) closed at $49.54 in the latest trading session, marking a +1.45% move from the prior day. This move lagged the S&P 500's daily gain of 2.76%. Meanwhile, the Dow gained 2.43%, and the Nasdaq, a tech-heavy index, added 0.05%.

Prior to today's trading, shares of the web security and content delivery company had gained 18.49% over the past month. This has outpaced the Computer and Technology sector's loss of 15.41% and the S&P 500's gain of 4.44% in that time.

Wall Street will be looking for positivity from Cloudflare as it approaches its next earnings report date. This is expected to be August 4, 2022. In that report, analysts expect Cloudflare to post earnings of -$0.01 per share. This would mark year-over-year growth of 50%. Meanwhile, our latest consensus estimate is calling for revenue of $227.52 million, up 49.26% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.03 per share and revenue of $956.18 million. These totals would mark changes of +160% and +45.67%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Cloudflare. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Cloudflare is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that Cloudflare has a Forward P/E ratio of 1860.19 right now. For comparison, its industry has an average Forward P/E of 43.21, which means Cloudflare is trading at a premium to the group.

Meanwhile, NET's PEG ratio is currently 74.41. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. NET's industry had an average PEG ratio of 2.37 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 137, which puts 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.

To follow NET in the coming trading sessions, be sure to utilize Zacks.com.


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