Latest news with #ShayBanon
Yahoo
29-05-2025
- Business
- Yahoo
Elastic (NYSE:ESTC) Exceeds Q1 Expectations But Stock Drops 11.1%
Search software company Elastic (NYSE:ESTC) reported Q1 CY2025 results topping the market's revenue expectations , with sales up 16% year on year to $388.4 million. The company expects next quarter's revenue to be around $397 million, close to analysts' estimates. Its non-GAAP profit of $0.47 per share was 25.9% above analysts' consensus estimates. Is now the time to buy Elastic? Find out in our full research report. Revenue: $388.4 million vs analyst estimates of $380.3 million (16% year-on-year growth, 2.1% beat) Adjusted EPS: $0.47 vs analyst estimates of $0.37 (25.9% beat) Adjusted Operating Income: $59.62 million vs analyst estimates of $51.15 million (15.3% margin, 16.6% beat) Revenue Guidance for Q2 CY2025 is $397 million at the midpoint, roughly in line with what analysts were expecting Adjusted EPS guidance for the upcoming financial year 2026 is $2.28 at the midpoint, beating analyst estimates by 9.4% Operating Margin: -3.1%, up from -13.6% in the same quarter last year Free Cash Flow Margin: 21.8%, similar to the previous quarter Customers: 21,500, up from 21,350 in the previous quarter Net Revenue Retention Rate: 112%, in line with the previous quarter Billings: $518.4 million at quarter end, up 16.1% year on year Market Capitalization: $9.64 billion Started by Shay Banon as a search engine for his wife's growing list of recipes at Le Cordon Bleu cooking school in Paris, Elastic (NYSE:ESTC) helps companies integrate search into their products and monitor their cloud infrastructure. Reviewing a company's long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Elastic grew its sales at a 19.8% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds. This quarter, Elastic reported year-on-year revenue growth of 16%, and its $388.4 million of revenue exceeded Wall Street's estimates by 2.1%. Company management is currently guiding for a 14.3% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 13.2% over the next 12 months, a deceleration versus the last three years. Still, this projection is noteworthy and implies the market is forecasting success for its products and services. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Billings is a non-GAAP metric that is often called 'cash revenue' because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract. Elastic's billings punched in at $518.4 million in Q1, and over the last four quarters, its growth was solid as it averaged 15.6% year-on-year increases. This performance aligned with its total sales growth, indicating robust customer demand. The cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth. One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company's products and services over time. Elastic's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 112% in Q1. This means Elastic would've grown its revenue by 12% even if it didn't win any new customers over the last 12 months. Elastic has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see. We were impressed by Elastic's strong growth in customers this quarter. We were also glad its full-year EPS guidance trumped Wall Street's estimates. On the other hand, its full-year revenue guidance slightly missed and its revenue guidance for next year suggests a slowdown in demand. Overall, this print was mixed. Investors were likely hoping for more, and shares traded down 11.1% to $81.75 immediately following the results. Big picture, is Elastic a buy here and now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
3 Inflated Stocks in the Doghouse
Great things are happening to the stocks in this article. They're all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase. While momentum can be a leading indicator, it has burned many investors as it doesn't always correlate with long-term success. Keeping that in mind, here are three overhyped stocks that may correct and some you should consider instead. One-Month Return: +17.9% Started by Shay Banon as a search engine for his wife's growing list of recipes at Le Cordon Bleu cooking school in Paris, Elastic (NYSE:ESTC) helps companies integrate search into their products and monitor their cloud infrastructure. Why Are We Cautious About ESTC? Suboptimal cost structure is highlighted by its history of operating losses Projected 2.3 percentage point decline in its free cash flow margin next year reflects the company's plans to increase its investments to defend its market position Elastic's stock price of $90.10 implies a valuation ratio of 5.8x forward price-to-sales. Check out our free in-depth research report to learn more about why ESTC doesn't pass our bar. One-Month Return: +14.3% Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services. Why Are We Wary of ACM? Demand cratered as it couldn't win new orders over the past two years, leading to an average 1.6% decline in its backlog High input costs result in an inferior gross margin of 6.4% that must be offset through higher volumes Subpar operating margin of 4.3% constrains its ability to invest in process improvements or effectively respond to new competitive threats At $107.44 per share, AECOM trades at 20.9x forward P/E. If you're considering ACM for your portfolio, see our FREE research report to learn more. One-Month Return: +10.9% Spun off from The Ensign Group in 2019 to focus on non-skilled nursing healthcare services, Pennant Group (NASDAQ:PNTG) operates home health, hospice, and senior living facilities across 13 western and midwestern states, serving patients of all ages including seniors. Why Are We Hesitant About PNTG? Smaller revenue base of $748.2 million means it hasn't achieved the economies of scale that some industry juggernauts enjoy Free cash flow margin shrank by 5.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens The Pennant Group is trading at $28 per share, or 25.2x forward P/E. Read our free research report to see why you should think twice about including PNTG in your portfolio, it's free. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
01-05-2025
- Business
- Yahoo
1 Cash-Heavy Stock with Solid Fundamentals and 2 to Steer Clear Of
A surplus of cash can mean financial stability, but it can also indicate a reluctance (or inability) to invest in growth. Some of these companies also face challenges like stagnating revenue, declining market share, or limited scalability. Financial flexibility is valuable, but it's not everything - at StockStory, we help you find the stocks that can not only survive but also outperform. That said, here is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle. Net Cash Position: $696.3 million (7.7% of Market Cap) Started by Shay Banon as a search engine for his wife's growing list of recipes at Le Cordon Bleu cooking school in Paris, Elastic (NYSE:ESTC) helps companies integrate search into their products and monitor their cloud infrastructure. Why Are We Hesitant About ESTC? Poor expense management has led to operating losses Projected 2.3 percentage point decline in its free cash flow margin next year reflects the company's plans to increase its investments to defend its market position Elastic is trading at $87.75 per share, or 5.5x forward price-to-sales. Read our free research report to see why you should think twice about including ESTC in your portfolio, it's free. Net Cash Position: $386.2 million (69% of Market Cap) Helping residents figure out what's happening on their block in real time, Nextdoor (NYSE:KIND) is a social network that connects neighbors with each other and with local businesses. Why Does KIND Worry Us? Preference for prioritizing user growth over monetization has led to 1.1% annual drops in its average revenue per user Suboptimal cost structure is highlighted by its history of EBITDA losses Negative free cash flow raises questions about the return timeline for its investments Nextdoor's stock price of $1.43 implies a valuation ratio of 2.6x forward price-to-gross profit. If you're considering KIND for your portfolio, see our FREE research report to learn more. Net Cash Position: $1.32 billion (4.1% of Market Cap) Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet. Why Are We Fans of HUBS? Customers view its software as mission-critical to their operations as its ARR has averaged 21.1% growth over the last year Software is difficult to replicate at scale and leads to a best-in-class gross margin of 85% Operating margin improvement of 6.7 percentage points over the last year demonstrates its ability to scale efficiently At $618 per share, HubSpot trades at 10.7x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
Yahoo
25-04-2025
- Business
- Yahoo
1 Software Stock on Our Buy List and 2 to Think Twice About
From commerce to culture, software is digitizing every aspect of our lives. The undeniable tailwinds fueling the industry have also tempered losses for SaaS stocks over the past six months as their 2.8% drawdown was relatively better than the S&P 500's 5.9% decline. However, only a handful of companies will ultimately thrive over the long term as the low barriers to entry for software businesses lead to fierce competition. With that said, here is one software stock boasting a durable advantage and two that may face trouble. Market Cap: $8.57 billion Started by Shay Banon as a search engine for his wife's growing list of recipes at Le Cordon Bleu cooking school in Paris, Elastic (NYSE:ESTC) helps companies integrate search into their products and monitor their cloud infrastructure. Why Are We Hesitant About ESTC? Suboptimal cost structure is highlighted by its history of operating losses Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.3 percentage points Elastic is trading at $84.99 per share, or 5.3x forward price-to-sales. To fully understand why you should be careful with ESTC, check out our full research report (it's free). Market Cap: $2.70 billion Founded in 2011 in North Carolina, nCino (NASDAQ:NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service. Why Are We Wary of NCNO? Estimated sales growth of 6.6% for the next 12 months implies demand will slow from its three-year trend High servicing costs result in a relatively inferior gross margin of 60.1% that must be offset through increased usage Rapid expansion strategy came at the expense of operating profitability nCino's stock price of $23.66 implies a valuation ratio of 4.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than NCNO. Market Cap: $123.2 billion Originally created as an internal tool for a snowboarding company, Shopify (NYSE:SHOP) provides a software platform for building and operating e-commerce businesses. Why Are We Backing SHOP? Payment activity on its platform is soaring as its TPV growth averaged 32% over the last year, enabling the company to collect more fees and upsell additional services like banking Software platform has product-market fit given the rapid recovery of its customer acquisition costs Operating margin expanded by 32.2 percentage points over the last year as it scaled and became more efficient At $94.50 per share, Shopify trades at 11.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it's free. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Yahoo
22-04-2025
- Business
- Yahoo
2 Reasons to Sell ESTC and 1 Stock to Buy Instead
Elastic currently trades at $77 per share and has shown little upside over the past six months, posting a small loss of 3%. However, the stock is beating the S&P 500's 11% decline during that period. Is now the time to buy Elastic, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team's opinion, it's free. Even with the strong relative performance, we're swiping left on Elastic for now. Here are two reasons why there are better opportunities than ESTC and a stock we'd rather own. Started by Shay Banon as a search engine for his wife's growing list of recipes at Le Cordon Bleu cooking school in Paris, Elastic (NYSE:ESTC) helps companies integrate search into their products and monitor their cloud infrastructure. Many software businesses adjust their profits for stock-based compensation (SBC), but we prioritize GAAP operating margin because SBC is a real expense used to attract and retain engineering and sales talent. This is one of the best measures of profitability because it shows how much money a company takes home after developing, marketing, and selling its products. Elastic's expensive cost structure has contributed to an average operating margin of negative 6.2% over the last year. Unprofitable, high-growth software companies require extra attention because they spend heaps of money to capture market share. As seen in its fast historical revenue growth, this strategy seems to have worked so far, but it's unclear what would happen if Elastic reeled back its investments. Wall Street seems to be optimistic about its growth, but we have some doubts. Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. Over the next year, analysts predict Elastic's cash conversion will fall. Their consensus estimates imply its free cash flow margin of 16.6% for the last 12 months will decrease to 14.8%. Elastic's business quality ultimately falls short of our standards. Following its recent outperformance in a weaker market environment, the stock trades at 4.9× forward price-to-sales (or $77 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're fairly confident there are better stocks to buy right now. Let us point you toward our favorite semiconductor picks and shovels play. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
