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

Zacks Equity Research
AppFolio (APPF) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Splunk (SPLK) closed at $126.84 in the latest trading session, marking a +1.8% move from the prior day. The stock outpaced the S&P 500's daily gain of 1.16%. Meanwhile, the Dow gained 1.27%, and the Nasdaq, a tech-heavy index, added 1.29%.

Heading into today, shares of the maker of software that helps companies collect and analyze internal data had lost 8.3% over the past month, lagging the Computer and Technology sector's gain of 3.18% and the S&P 500's gain of 1.92% in that time.

Wall Street will be looking for positivity from SPLK as it approaches its next earnings report date. The company is expected to report EPS of -$0.15, down 114.29% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $395.81 million, up 27.01% from the prior-year quarter.

SPLK's full-year Zacks Consensus Estimates are calling for earnings of $1.68 per share and revenue of $2.21 billion. These results would represent year-over-year changes of +26.32% and +22.55%, respectively.

Investors should also note any recent changes to analyst estimates for SPLK. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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 32.65% lower. SPLK is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note SPLK's current valuation metrics, including its Forward P/E ratio of 74.89. This valuation marks a premium compared to its industry's average Forward P/E of 56.37.

Also, we should mention that SPLK has a PEG ratio of 3.14. 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 industry currently had an average PEG ratio of 3.14 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 56, putting it in the top 22% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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