Shares of Coupa Software (COUP) have been strong performers lately, with the stock up 13.6% over the past month. The stock hit a new 52-week high of $238.42 in the previous session. Coupa Software has gained 63% since the start of the year compared to the 7.5% move for the Zacks Computer and Technology sector and the 39% return for the Zacks Internet - Software industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on June 8, 2020, Coupa Software, Inc. reported EPS of $0.2 versus consensus estimate of $0.07 while it beat the consensus revenue estimate by 6.61%.
For the current fiscal year, Coupa Software, Inc. is expected to post earnings of $0.41 per share on $492.65 million in revenues. This represents a -21.15% change in EPS on a 26.41% change in revenues. For the next fiscal year, the company is expected to earn $0.64 per share on $616.75 million in revenues. This represents a year-over-year change of 56.3% and 25.19%, respectively.
Coupa Software, Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Coupa Software, Inc. has a Value Score of F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 584X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 481.3X versus its peer group's average of 25X. Additionally, the stock has a PEG ratio of 21.02. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Coupa Software, Inc. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Coupa Software, Inc. fits the bill. Thus, it seems as though Coupa Software, Inc. shares could still be poised for more gains ahead.
How Does Coupa Software, Inc. Stack Up to the Competition?
Shares of Coupa Software, Inc. have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Domo (DOMO), Atlassian Corporation (TEAM), and Coupa Software (COUP), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Coupa Software, Inc.even beyond its own solid fundamental situation.
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