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

Zacks Equity Research
Enterprise Products Partners (EPD) closed the most recent trading day at $30.15, moving -0.56% from the previous trading session.

Splunk (SPLK) closed the most recent trading day at $132.42, moving -0.53% from the previous trading session. This move lagged the S&P 500's daily loss of 0.35%. At the same time, the Dow lost 0.4%, and the tech-heavy Nasdaq lost 0.39%.

Coming into today, shares of the maker of software that helps companies collect and analyze internal data had gained 11.45% in the past month. In that same time, the Computer and Technology sector gained 5.75%, while the S&P 500 gained 4.48%.

SPLK will be looking to display strength as it nears its next earnings release, which is expected to be February 28, 2019. The company is expected to report EPS of $0.76, up 105.41% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $560.66 million, up 33.58% from the year-ago period.

Investors should also note any recent changes to analyst estimates for SPLK. 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. 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. SPLK is currently a Zacks Rank #3 (Hold).

In terms of valuation, SPLK is currently trading at a Forward P/E ratio of 80.76. For comparison, its industry has an average Forward P/E of 52.77, which means SPLK is trading at a premium to the group.

It is also worth noting that SPLK currently has a PEG ratio of 2.84. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Software was holding an average PEG ratio of 2.84 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 31, putting it in the top 13% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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