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Cloudflare (NET) Outpaces Stock Market Gains: What You Should Know

Cloudflare (NET) closed at $66.94 in the latest trading session, marking a +1.69% move from the prior day. This move outpaced the S&P 500's daily gain of 1.06%. At the same time, the Dow added 0.71%, and the tech-heavy Nasdaq gained 0.18%.

Heading into today, shares of the web security and content delivery company had lost 15.2% over the past month, lagging the Computer and Technology sector's loss of 4.33% and the S&P 500's loss of 1.14% in that time.

Investors will be hoping for strength from Cloudflare as it approaches its next earnings release. Our most recent consensus estimate is calling for quarterly revenue of $250.2 million, up 45.17% from the year-ago period.

NET's full-year Zacks Consensus Estimates are calling for earnings of $0.03 per share and revenue of $971.39 million. These results would represent year-over-year changes of +160% and +47.98%, respectively.

It is also important to note the recent changes to analyst estimates for Cloudflare. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate has moved 3.82% lower. Cloudflare is currently a Zacks Rank #4 (Sell).

Looking at its valuation, Cloudflare is holding a Forward P/E ratio of 2003.52. Its industry sports an average Forward P/E of 44.29, so we one might conclude that Cloudflare is trading at a premium comparatively.

Investors should also note that NET has a PEG ratio of 80.14 right now. 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 2.73 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 144, which puts it in the bottom 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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