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Cloudflare (NET) Outperforms Broader Market: What You Need to Know

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Cloudflare (NET - Free Report) closed at $225.94 in the latest trading session, marking a +1.06% move from the prior day. The stock's change was more than the S&P 500's daily gain of 0.49%. Elsewhere, the Dow gained 0.38%, while the tech-heavy Nasdaq added 0.72%.

Prior to today's trading, shares of the web security and content delivery company had gained 15.98% outpaced the Computer and Technology sector's gain of 6.81% and the S&P 500's gain of 2.99%.

Analysts and investors alike will be keeping a close eye on the performance of Cloudflare in its upcoming earnings disclosure. The company is expected to report EPS of $0.23, up 15% from the prior-year quarter. Meanwhile, the latest consensus estimate predicts the revenue to be $544.06 million, indicating a 26.5% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $0.84 per share and revenue of $2.11 billion, which would represent changes of +12% and +26.66%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Cloudflare. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.99% lower. Cloudflare is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Cloudflare has a Forward P/E ratio of 265.18 right now. This valuation marks a premium compared to its industry average Forward P/E of 32.6.

Also, we should mention that NET has a PEG ratio of 11.05. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. By the end of yesterday's trading, the Internet - Software industry had an average PEG ratio of 2.33.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 64, putting it in the top 26% of all 250+ industries.

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

You can find more information on all of these metrics, and much more, on Zacks.com.


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