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Splunk (SPLK) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Splunk (SPLK) closed at $124.54, marking a +1.69% move from the previous day. This move outpaced the S&P 500's daily gain of 1.3%. Meanwhile, the Dow gained 1.21%, and the Nasdaq, a tech-heavy index, added 1.39%.

Heading into today, shares of the maker of software that helps companies collect and analyze internal data had lost 6.09% over the past month, lagging the Computer and Technology sector's loss of 4.48% and the S&P 500's loss of 4.84% in that time.

Wall Street will be looking for positivity from SPLK as it approaches its next earnings report date. This is expected to be August 21, 2019. In that report, analysts expect SPLK to post earnings of $0.12 per share. This would mark year-over-year growth of 50%. Our most recent consensus estimate is calling for quarterly revenue of $486.70 million, up 25.34% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.80 per share and revenue of $2.26 billion, which would represent changes of +35.34% and +25.21%, respectively, from the prior year.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. SPLK is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that SPLK has a Forward P/E ratio of 67.99 right now. This valuation marks a premium compared to its industry's average Forward P/E of 55.04.

Also, we should mention that SPLK has a PEG ratio of 2.46. 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 2.82 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 76, putting it in the top 30% 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.

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


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