#Splunk stock price last year software#

Given the performance of Splunk stock over the past 12+ months, it does seem worth staying on the sidelines and hoping for a better entry point. But it only takes one earnings miss for competitive risks to move to the forefront of investors’ minds. The shares probably can grow into their forward price-earnings multiple of 40+. Its valuation might be questionable, but it is quite attractive relative to what investors have been willing to pay for growth stocks in recent years.īut I’m not sure Splunk stock quite gets to the point of being compelling for those investors who aren’t focused on growth stocks. Hope for a Better Entry Point?įor software-as-a-service (SaaS) investors, then, SPLK probably is at the top of the list. DDOG is trading at roughly 20 times its revenue, suggesting that investors are bullish on its outlook.Both Datadog and Elastic have posted stronger revenue growth than Splunk of late, although both are doing so from lower revenue bases than SPLK. Datadog offers a unified platform that includes log management, but also infrastructure, cloud, and application-performance monitoring. Elastic (NYSE: ESTC), for example, offers an open-source ELK Stack which allows customers to build their own log management systems, as opposed to buying them from Splunk.ĭatadog (NASDAQ: DDOG), which recently launched its IPO, is another competitor. Splunk is the leader in log management, but it has some tough competitors.

The other considerable risk is on the competitive front. If the stock market tumbles again, SPLK stock will fall further. Moreover, Splunk stock lost about a third of its value during last year’s Q4 stock-market selloff. Eight times revenue, even with Splunk’s attractive gross margins, still prices in quite a bit of growth. But the shares pose some risks as well.įor one, SPLK might well be cheap on a relative basis, but that doesn’t guarantee that the shares will rise. The bull case on SPLK is intriguing, and I wouldn’t be surprised to see SPLK stock break out at some point. Last month, Raymond James said the company’s new pricing model could boost Splunk stock in the near-term. Wall Street analysts seem to agree their average price target on SPLK stock is about 25% above its current price. The bull case is that the company’s growth outlook remains intact, while short-term concerns have moved SPLK stock to a lower and more attractive valuation.

#Splunk stock price last year software#

That guidance overshadowed a strong report, as SPLK’s software revenue jumped 46% year-over-year. That transition creates uneven sales growth, meaning the guidance change indicates little, if any, alteration of Splunk’s long-term cash flow. But bulls would argue that the shift was caused by the company’s transition to a subscription model. Splunk’s guidance went from $250 million to -$300 million, a seemingly huge change. And bulls would argue that some of the relative weakness has come from a misunderstanding surrounding the company’s cash flow guidance.Īfter all, Splunk stock fell after its Q2 results partly because of its cash flow guidance. That performance, combined with the company’s revenue and profit growth, has caused the multiples of Splunk stock to fall. Meanwhile, as noted earlier, SPLK stock has stalled out, trading sideways for the last 13+ months. Its sales are expected to increase roughly 28% in FY20. Its revenue increased 41% in fiscal 2017 and jumped 38%+ in the following two years. And the company’s growth has been impressive. Splunk’s log-management offerings are a direct play on Big Data. Its valuation is still higher than that of the average stock, and for good reason. But investors who are considering buying Splunk stock need to consider multiple points. Overall, I’d lean towards the bullish argument. There are also interesting arguments as to why SPLK stock deserves the discount. There are interesting arguments for why the relatively low valuation of Splunk stock has created a buying opportunity.

Splunk stock actually sits below where it was after its fiscal Q2 results which were released back in August 2018. Other software companies are growing at rates similar to SPLK and have higher valuations.īut why is SPLK stock trading at a discount to some of its peers and why has that situation persisted? SPLK stock has gained roughly 20% over the past year, but that figure is skewed by timing. WDAY trades at over 11 times its revenue, and PAYC’s price-sales ratio is 17. In recent quarters, Workday (NASDAQ: WDAY) and Paycom Software (NYSE: PAYC) posted similar revenue increases as SPLK. Its price-sales ratio is one of the lowest of any company whose revenues are growing at a 30%+ clip. But it does look at least inexpensive compared with its peers.

Splunk stock hardly seems like a value play.