U.S. Markets open in 6 hrs 1 min

Splunk (SPLK) Gains But Lags Market: What You Should Know

Zacks Equity Research

Splunk (SPLK) closed the most recent trading day at $124.88, moving +0.1% from the previous trading session. This move lagged the S&P 500's daily gain of 0.16%. Meanwhile, the Dow 0%, and the Nasdaq, a tech-heavy index, added 0.26%.

Heading into today, shares of the maker of software that helps companies collect and analyze internal data had gained 4.24% over the past month, lagging the Computer and Technology sector's gain of 4.79% and outpacing the S&P 500's gain of 4.12% in that time.

Investors will be hoping for strength from SPLK as it approaches its next earnings release, which is expected to be November 21, 2019. The company is expected to report EPS of $0.53, up 39.47% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $603.41 million, up 25.45% from the prior-year quarter.

SPLK's full-year Zacks Consensus Estimates are calling for earnings of $1.85 per share and revenue of $2.31 billion. These results would represent year-over-year changes of +39.1% and +28.1%, respectively.

Investors should also note any recent changes to analyst estimates for SPLK. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 6.02% lower. SPLK currently has a Zacks Rank of #3 (Hold).

In terms of valuation, SPLK is currently trading at a Forward P/E ratio of 67.28. For comparison, its industry has an average Forward P/E of 57.01, which means SPLK is trading at a premium to the group.

It is also worth noting that SPLK currently has a PEG ratio of 2.15. 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 2.77 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 102, which puts it in the top 40% 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.

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
Splunk Inc. (SPLK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research