Why Cloudflare (NET) Dipped More Than Broader Market Today

Cloudflare (NET) closed at $277.85 in the latest trading session, marking a -2.34% move from the prior day. The stock trailed the S&P 500, which registered a daily loss of 0.38%. Elsewhere, the Dow lost 0.51%, while the tech-heavy Nasdaq lost 0.29%.

The stock of web security and content delivery company has risen by 0.03% in the past month, lagging the Computer and Technology sector's gain of 2.81% and the S&P 500's gain of 2.08%.

The investment community will be paying close attention to the earnings performance of Cloudflare in its upcoming release. The company's upcoming EPS is projected at $0.34, signifying a 25.93% increase compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $732.89 million, showing a 30.4% escalation compared to the year-ago quarter.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $1.26 per share and a revenue of $2.87 billion, representing changes of +35.48% and +32.32%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Cloudflare. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 9.09% higher within the past month. As of now, Cloudflare holds a Zacks Rank of #3 (Hold).

From a valuation perspective, Cloudflare is currently exchanging hands at a Forward P/E ratio of 226.1. This expresses a premium compared to the average Forward P/E of 21 of its industry.

Meanwhile, NET's PEG ratio is currently 6.05. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The average PEG ratio for the Internet - Software industry stood at 1.1 at the close of the market yesterday.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 74, which puts it in the top 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research