What's Driving Varonis Systems Inc's Surprising 24% Stock Rally?
Varonis Systems Inc (NASDAQ:VRNS), a leading cybersecurity vendor, has seen a significant surge in its stock price over the past three months. Despite a minor setback of 2.17% over the past week, the stock has rallied by an impressive 23.69% over the past quarter. This performance is particularly noteworthy when considering the company's GF Value, which currently stands at $54.05, indicating that the stock is significantly undervalued. This is consistent with the GF Value three months ago, which was $57.02, also suggesting significant undervaluation. The GF Value, defined by GuruFocus.com, calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates.
Unpacking Varonis Systems Inc
Founded in 2004 and publicly listed in 2014, Varonis Systems Inc operates within the software industry, specializing in data privacy and security. The New York-based firm is currently transitioning its on-premises customers to its cloud products, which are delivered as software-as-a-service (SaaS). With a market capitalization of $3.46 billion, the company's stock price currently stands at $31.56.
Profitability Analysis of Varonis Systems Inc
Varonis Systems Inc's profitability rank is 3/10, indicating a relatively low level of profitability. The company's operating margin is -24.23%, which is better than 25.13% of companies in the industry. Its ROE and ROA are -23.17% and -11.19% respectively, outperforming 24.44% and 28.94% of companies in the industry. The company's ROIC is -57.64%, which is better than 13.09% of companies in the industry.
Growth Prospects of Varonis Systems Inc
The company's growth rank is 6/10, indicating moderate growth. Its 3-year and 5-year revenue growth rates per share are 15.70% and 9.50% respectively, outperforming 66.74% and 60.54% of companies in the industry. The company's future total revenue growth rate estimate is 10.94%, which is better than 48.61% of companies in the industry. However, its 3-year and 5-year EPS without NRI growth rates are -9.40% and -46.70% respectively, outperforming only 29.8% and 2.59% of companies in the industry. The company's future EPS without NRI growth rate estimate is 49.81%, which is better than 94.96% of companies in the industry.
Major Holders of Varonis Systems Inc Stock
The top three holders of Varonis Systems Inc's stock are Ron Baron (Trades, Portfolio), Jim Simons (Trades, Portfolio), and Baillie Gifford (Trades, Portfolio). Ron Baron (Trades, Portfolio) holds 972,009 shares, representing 0.89% of the company's stock. Jim Simons (Trades, Portfolio) holds 586,300 shares, representing 0.53% of the company's stock. Baillie Gifford (Trades, Portfolio) holds 26,782 shares, representing 0.02% of the company's stock.
Competitive Landscape of Varonis Systems Inc
Varonis Systems Inc operates in a competitive industry with major players such as Nutanix Inc(NASDAQ:NTNX) with a market cap of $8.63 billion, Engagesmart Inc(NYSE:ESMT) with a market cap of $2.96 billion, and Wix.com Ltd(NASDAQ:WIX) with a market cap of $5.38 billion.
Conclusion
In conclusion, Varonis Systems Inc has demonstrated a strong stock performance over the past quarter, with a significant 23.69% increase. Despite its low profitability rank, the company's growth prospects are promising, with a growth rank of 6/10. The company's transition to cloud-based products and services could potentially drive further growth in the future. However, the company operates in a highly competitive industry, and its performance should be evaluated in the context of its competitors.
This article first appeared on GuruFocus.
