One of the biggest stories Wednesday morning is Crowdstrike (CRWD), which fell 20% after news of their dismal earnings made waves among investors and analysts alike.
The cybersecurity company reported revenue and profit that topped estimates, and earnings were up 135% over the previous year at 40 cents per share. So – what caused the drop, exactly?
It was a slight miss on ARR – or annual recurring revenue. This is a key financial metric that speaks to a company’s subscription consumer growth rate. Crowdstrike reported that in the third quarter, ARR was up a whopping 54% over the previous year’s period. The figure came in at $2.34 billion – but, missed estimates of $2.36 billion.
This slight hiccup was enough to send the stock spiraling down – as analysts and other talking heads went into a frenzy. Further exacerbating the downfall of Crowdstrike stock was a dismal outlook for the quarter ending in January. Estimates are $634 million, and the company is expecting $623.5 million.
The problem for Crowdstrike is the current macroeconomic conditions – at least, according to management within the company. They report that sales cycles are being elongated in both small and large customers. As the average days required to close a deal are climbing, ARR is dropping.
Crowdstrike stock is down 51% in the past year after all this – sitting at a price of $110/share. And when evaluating the news that resulted in this loss, it appears to be more an issue of investor sentiment rather than a real cause for concern – at least, on the surface. Thus, the current share price may look attractive to speculative investors wanting to get in at a good value.
So – should you buy the dip on CRWD stock, or is the concern substantiated? If you’re looking for a clear recommendation on what your next move should be, keep reading – we’ll take a look at 3 key ratings through the VectorVest stock analysis software.
3 Ratings to Help You Make Your Next Move with Crowdstrike Stock
The VectorVest system helps you effortlessly identify and vet opportunities in the stock market – trading at a higher rate of success than through traditional strategies. Now, you can rely on just three simple ratings to tell you everything you need to know – relative value (RV), relative safety (RS), and relative timing (RT).
These ratings sit on an easy-to-understand scale of 0.00-2.00. Ratings over the average of 1.00 indicate overperformance and vice versa. And based on the culmination of these three ratings, you’re given a clear buy, sell, or hold recommendation. Here’s the current situation for CRWD after the earnings miss:
- Fair Upside Potential: The RV rating analyzes a company’s long-term price appreciation potential three years out. It’s far superior to a comparison of price and value alone as it takes note of AAA corporate bond rates, risk, and more. As for CRWD, the RV rating of 0.91 is fair – but is just below the average. Moreover, the stock is way overvalued at the current price per share of – with a current value of just $26.86.
- Poor Safety: Taking a look at risk, the RS rating for CRWD is poor at just 0.78. This rating is calculated from a deep analysis of a company’s financial consistency and predictability, debt-to-equity ratio, and business longevity.
- Very Poor Timing: As you can see from today’s 20% loss, the price trend for CRWD is very poor right now – and the RT rating of 0.29 reflects that. This rating is calculated based on the direction, dynamics, and magnitude of a stock’s price trend. It’s analyzed day over day, week over week, quarter over quarter, and year over year.
All three of these ratings work out to an overall VST rating of 0.69 – which is poor. So – what does that mean for you? Is it time to sell? If you’re looking for a clear answer on your next move, get a free stock analysis at VectorVest – no emotion or guesswork is necessary.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for CRWD, it is overvalued with poor upside potential, poor safety, and very poor timing.
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