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Is HubSpot's (HUBS) Retention in Your Portfolio Justified?

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HubSpot Inc. (HUBS - Free Report) has been a favorite with investors, courtesy of its rising share price and strong fundamentals. Shares of HubSpot returned 84.6% in the past year, substantially better than the industry’s rally of 25.8%. It is benefiting from a robust product portfolio and the expansion of the customer base.

 

Let’s delve deeper and take a look at some of the aspects that are aiding the company’s performance.

Key Drivers

Integration of HubSpot’s services with social media giants like Facebook and Shopify (SHOP - Free Report) is driving adoption. It has been continuously striving to expand the customer base which increased 48% in the last reported quarter. The rapid adoption of Hubspot One and Hubspot CRM tools is a positive for the company. Moreover, expanding international footprint is a positive as well.

Further, the acquisitions of Motion AI and Kemvi reflect the company’s focus on integrating artificial intelligence (AI) and expanding solutions portfolio.

The launch of Customer Hub will boost top-line growth in 2018.

Further, the company recently announced that it will adopt Google Cloud to strengthen its international cloud infrastructure. The extended partnership with Alphabet’s (GOOGL - Free Report) division Google will help it rapidly penetrate the small and medium business (SMB) markets in Europe.

HubSpot forecasts revenues of $109.2-$110.2 million for first-quarter 2018. The Zacks Consensus Estimate is currently pegged at $106.8 million. Moreover, HubSpot expects non-GAAP net income per share to be 10-12 cents. The Zacks Consensus Estimate is currently pegged at 7 cents per share.

For full-year 2018, HubSpot anticipates revenues of $481-$485 million. The Zacks Consensus Estimate is currently pegged at $468.5 million. Non-GAAP net income per share is anticipated to be 51-59 cents. The Zacks Consensus Estimate is currently pegged at 40 cents per share.

HubSpot has an impressive earnings surprise history. It outpaced the Zacks Consensus Estimate in all the trailing four quarters, recording a positive average earnings surprise of 208.5%.

Further, it has long-term expected EPS growth rate of 50%.

Zacks Rank and Key Picks

HubSpot currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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