Yahoo Finance How to Play Elastic (ESTC) Ahead of Its Q4 Earnings Results?
Elastic ESTC will report its fourth-quarter fiscal 2024 results on May 30, after market close.
Let us check out how ESTC has lately been doing.
Stock Performance & Valuation
The stock has gained 36.9% over the past six months, outperforming the 25.3% rally of the industry it belongs to and the 16.7% rise of the Zacks S&P 500 composite.
On the basis of the Price/Sales ratio, ESTC currently trades at 7.18X, above the industry’s 6.86X.
Elastic N.V. Price and EPS Surprise
Elastic N.V. price-eps-surprise | Elastic N.V. Quote
Q3 Sales & Margin Performance
ESTC’s third-quarter fiscal 2024 revenues amounted to $327.96 million, indicating a rise of 19% on a year-over-year basis. The rise in the top line was majorly driven by subscription revenues, representing 93.8% of the total revenues in third-quarter fiscal 2024.
Subscription revenues grew 20% from the year-ago quarter to $307.63 million. Elastic Cloud, which represents 44% of the subscription revenues, grew 29%, aiding growth of this segment. Also, the improvement was led by the rise in total subscription customer count.
The gross margin of 77% increased 20 basis points in third-quarter fiscal 2024. An operating margin of 13% was reported. The strong operating margin performance was driven by the outperformance of revenues and focus on managing expenses.
Liquidity
ESTC’s current ratio (a measure of liquidity) was 1.87 at the end of third-quarter 2024, lower than the preceding quarter’s and year-ago quarter’s 1.89. Although it declined slightly, a current ratio of more than 1 often indicates that a company will easily pay off its short-term obligations.
Sales & EPS Growth Prospects
For fourth-quarter fiscal 2024, the Zacks Consensus Estimate for revenues is pegged at $329.17 million, indicating a 17.6% rise on a year-over-year basis. The consensus estimate for earnings is pegged at 19 cents per share, implying a dip of 13.6% from the year-ago quarter’s actual.
For fiscal 2024, the Zacks Consensus Estimate for ESTC’s revenues is pegged at $1.26 billion, suggesting 18% year-over-year growth. The consensus estimate for earnings is pinned at $1.17 per share, implying more than 100% year-over-year growth.
To Conclude
ESTC trades at a premium relative to its industry based on its Price-to-Sales ratio.
Moreover, since the stock has gained a whopping 36.9% over the past six months, it may undergo a correction soon.
Also, ESTC does not seem poised for an earnings beat. Per our quantitative model, the combination of two key elements — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. But that is not the case with ESTC, as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Given this backdrop, it may not be a bad idea to wait for this fundamentally strong stock to undergo some correction and offer a better entry point rather than rushing to purchase the stock before earnings.
Earnings Snapshot
Verisk Analytics Inc. VRSK reported impressive first-quarter 2024 results.
VRSK’s adjusted earnings (excluding 11 cents from non-recurring items) were $1.6 per share, beating the Zacks Consensus Estimate by 7.2% and increasing 26.4% from the year-ago quarter. Total revenues of $704 million surpassed the consensus estimate marginally and increased 8% year over year on a reported basis and 6.9% on an organic constant currency basis.
Stantec Inc. STN reported impressive first-quarter 2024 results.
STN’s quarterly earnings were 67 cents per share, surpassing the Zacks Consensus Estimate by 6.4% and increasing 24.1% on a year-over-year basis. Revenues of $1.02 billion beat the consensus mark by 2% but declined 10.7% from the year-ago quarter.
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Stantec Inc. (STN) : Free Stock Analysis Report
Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report
Elastic N.V. (ESTC) : Free Stock Analysis Report
