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

Zacks Equity Research
Signature Bank (SBNY) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Splunk (SPLK) closed the most recent trading day at $127.30, moving +1.97% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.09%. Elsewhere, the Dow gained 0.26%, while the tech-heavy Nasdaq lost 0.25%.

Prior to today's trading, shares of the maker of software that helps companies collect and analyze internal data had gained 23.84% over the past month. This has outpaced the Computer and Technology sector's gain of 8.88% and the S&P 500's gain of 7.92% in that time.

Investors will be hoping for strength from SPLK as it approaches its next earnings release, which is expected to be March 7, 2019. In that report, analysts expect SPLK to post earnings of $0.76 per share. This would mark year-over-year growth of 105.41%. Our most recent consensus estimate is calling for quarterly revenue of $560.66 million, up 33.58% from the year-ago period.

Any recent changes to analyst estimates for SPLK should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. SPLK currently has a Zacks Rank of #3 (Hold).

Investors should also note SPLK's current valuation metrics, including its Forward P/E ratio of 106.49. Its industry sports an average Forward P/E of 55, so we one might conclude that SPLK is trading at a premium comparatively.

Also, we should mention that SPLK has a PEG ratio of 3.74. 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. Internet - Software stocks are, on average, holding a PEG ratio of 2.75 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 30, which puts it in the top 12% 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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