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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 $157.96, moving -1.47% from the previous trading session. This change lagged the S&P 500's daily gain of 0.39%. Elsewhere, the Dow gained 0.17%, while the tech-heavy Nasdaq added 0.34%.

Heading into today, shares of the maker of software that helps companies collect and analyze internal data had gained 6.78% over the past month, outpacing the Computer and Technology sector's gain of 6.58% and the S&P 500's gain of 4.73% in that time.

Investors will be hoping for strength from SPLK as it approaches its next earnings release. On that day, SPLK is projected to report earnings of $0.96 per share, which would represent year-over-year growth of 3.23%. Meanwhile, our latest consensus estimate is calling for revenue of $783.94 million, up 26.02% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.87 per share and revenue of $2.35 billion, which would represent changes of +40.6% and +30.43%, respectively, from the prior year.

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.

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 remained stagnant. SPLK is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, SPLK is holding a Forward P/E ratio of 85.68. For comparison, its industry has an average Forward P/E of 57.88, which means SPLK is trading at a premium to the group.

We can also see that SPLK currently has a PEG ratio of 2.74. 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. The Internet - Software industry currently had an average PEG ratio of 2.58 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 116, which puts it in the top 46% 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.

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