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

Zacks Equity Research

Splunk (SPLK) closed the most recent trading day at $119.58, moving -0.09% from the previous trading session. This change lagged the S&P 500's daily gain of 0.41%. Elsewhere, the Dow gained 0.57%, while the tech-heavy Nasdaq added 0.7%.

Heading into today, shares of the maker of software that helps companies collect and analyze internal data had gained 0.1% over the past month, lagging the Computer and Technology sector's gain of 2.38% and the S&P 500's gain of 2.04% in that time.

Investors will be hoping for strength from SPLK as it approaches its next earnings release. In that report, analysts expect SPLK to post earnings of $0.52 per share. This would mark year-over-year growth of 36.84%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $603.71 million, up 25.52% from the year-ago period.

SPLK's full-year Zacks Consensus Estimates are calling for earnings of $1.86 per share and revenue of $2.31 billion. These results would represent year-over-year changes of +39.85% and +28.14%, respectively.

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 a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. SPLK is currently sporting a Zacks Rank of #1 (Strong Buy).

In terms of valuation, SPLK is currently trading at a Forward P/E ratio of 64.3. This represents a premium compared to its industry's average Forward P/E of 54.51.

Also, we should mention that SPLK has a PEG ratio of 2.06. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Software stocks are, on average, holding a PEG ratio of 2.81 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 57, which puts it in the top 23% 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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