Here’s What You Should Understand Beyond the Reasons CrowdStrike (CRWD) is Popular

CrowdStrike Holdings: Recent Performance and Outlook

CrowdStrike Holdings (CRWD) has recently attracted significant attention from investors. Let’s explore the main factors that could influence its short-term stock performance.

Recent Stock Movement

Over the past month, CrowdStrike’s share price has dropped by 14.3%, while the S&P 500 index has seen a modest gain of 0.6%. The security sector, which includes CrowdStrike, has declined by 16.9% during the same period. This raises the question: what’s next for CrowdStrike’s stock?

What Drives the Stock?

Although news and speculation can cause quick shifts in a company’s share price, long-term investors typically focus on fundamental factors when making decisions.

Changes in Earnings Expectations

Zacks places a strong emphasis on how analysts update their earnings forecasts for a company, as these revisions often have a direct impact on stock valuation. When analysts raise their earnings estimates, it can signal a higher fair value for the stock, which may attract buyers and push the price up. Research consistently finds a close link between changes in earnings estimates and short-term stock price movements.

• For the current quarter, CrowdStrike is projected to earn $1.10 per share, a 6.8% increase from the same period last year. This estimate has remained steady over the past month.
• The consensus for the current fiscal year is $3.72 per share, reflecting a 5.3% decrease year-over-year, but this estimate has been raised by 10.3% in the last 30 days.
• Looking ahead, next year’s consensus estimate is $4.85 per share, which would be a 30.5% increase from the previous year. This figure has been revised upward by 1.7% in the past month.

Zacks’ proprietary ranking system, which incorporates earnings estimate revisions and other factors, currently assigns CrowdStrike a Rank #3 (Hold), suggesting the stock may perform similarly to the broader market in the near future.

Forward 12-Month EPS Trend

The following chart illustrates the progression of CrowdStrike’s forward 12-month consensus EPS estimate:

Revenue Growth Projections

While earnings growth is a key indicator of financial strength, sustained profit increases are difficult without rising revenues. Understanding a company’s revenue outlook is therefore essential.

• The consensus sales estimate for the current quarter is $1.3 billion, representing a 22.5% increase from a year ago.
• For the current and next fiscal years, revenue is expected to reach $4.8 billion and $5.84 billion, up 21.5% and 21.6%, respectively.

Recent Results and Earnings Surprises

In the most recent quarter, CrowdStrike reported revenue of $1.23 billion, up 22.2% year-over-year. Earnings per share came in at $0.96, compared to $0.93 in the prior year.

• Revenue exceeded the consensus estimate by 1.61%.
• EPS surpassed expectations by 2.13%.
• CrowdStrike has beaten consensus EPS estimates in each of the last four quarters and exceeded revenue forecasts three times during this period.

Valuation Overview

Assessing whether a stock is fairly valued is crucial for investment decisions. Comparing valuation ratios like price-to-earnings, price-to-sales, and price-to-cash flow to historical averages and industry peers helps determine if a stock is overvalued or undervalued.

The Zacks Value Style Score, which grades stocks from A to F based on various valuation metrics, currently gives CrowdStrike an F, indicating that the stock is trading at a premium compared to its peers.

Conclusion

The information above, along with additional resources on Zacks.com, can help investors decide whether to pay attention to the current market buzz around CrowdStrike. With a Zacks Rank #3, the stock is expected to perform in line with the overall market in the near term.