CrowdStrike (CRWD) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of CrowdStrike Holdings (CRWD)? Shares have been on the move with the stock up 5.5% over the past month. The stock hit a new 52-week high of $185.25 in the previous session. CrowdStrike Holdings has gained 72.7% since the start of the year compared to the 37.7% move for the Zacks Computer and Technology sector and the 50.6% return for the Zacks Internet - Software industry.
What's Driving the Outperformance?
The stock has an impressive 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 August 30, 2023, CrowdStrike reported EPS of $0.74 versus consensus estimate of $0.56.
For the current fiscal year, CrowdStrike is expected to post earnings of $2.82 per share on $3.04 billion in revenues. This represents an 83.12% change in EPS on a 35.56% change in revenues. For the next fiscal year, the company is expected to earn $3.45 per share on $3.88 billion in revenues. This represents a year-over-year change of 22.25% and 27.78%, respectively.
Valuation Metrics
CrowdStrike 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
CrowdStrike has a Value Score of F. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 64.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 37.8X. On a trailing cash flow basis, the stock currently trades at 402.6X versus its peer group's average of 14.9X. Additionally, the stock has a PEG ratio of 1.8. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, CrowdStrike 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 CrowdStrike passes the test. Thus, it seems as though CrowdStrike shares could still be poised for more gains ahead.
How Does CRWD Stack Up to the Competition?
Shares of CRWD have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Evolent Health, Inc (EVH). EVH has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Evolent Health, Inc beat our consensus estimate by 55.56%, and for the current fiscal year, EVH is expected to post earnings of $0.54 per share on revenue of $1.94 billion.
Shares of Evolent Health, Inc have gained 7.3% over the past month, and currently trade at a forward P/E of 51.48X and a P/CF of 18.81X.
The Internet - Software industry is in the top 27% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CRWD and EVH, even beyond their own solid fundamental situation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CrowdStrike (CRWD) : Free Stock Analysis Report
Evolent Health, Inc (EVH) : Free Stock Analysis Report
