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Splunk (SPLK) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Splunk (SPLK) closed the most recent trading day at $138.22, moving -1.78% from the previous trading session. This change lagged the S&P 500's 0.16% loss on the day. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, lost 0.44%.

Heading into today, shares of the maker of software that helps companies collect and analyze internal data had gained 13.28% over the past month, outpacing the Computer and Technology sector's gain of 6.51% and the S&P 500's gain of 4% in that time.

Investors will be hoping for strength from SPLK as it approaches its next earnings release. The company is expected to report EPS of $0.12, up 50% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $486.70 million, up 25.34% from the year-ago period.

SPLK's full-year Zacks Consensus Estimates are calling for earnings of $1.80 per share and revenue of $2.26 billion. These results would represent year-over-year changes of +35.34% and +25.21%, respectively.

Any recent changes to analyst estimates for SPLK should also be noted by investors. Recent revisions tend to reflect the latest near-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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 remained stagnant. SPLK is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, SPLK currently has a Forward P/E ratio of 78.12. Its industry sports an average Forward P/E of 66.64, so we one might conclude that SPLK is trading at a premium comparatively.

We can also see that SPLK currently has a PEG ratio of 2.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 3.69 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 71, putting it in the top 28% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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