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Buy Splunk (SPLK) Before Earnings This Evening

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My favorite real-time machine data management powerhouse, Splunk (SPLK - Free Report) , is preparing to release its April quarter report after the bell Wednesday evening (6/2). It could be an excellent opportunity to start a position in this revolutionary enterprise before what I predict will be a springboard of quarterly results.

SPLK has been a notable tech laggard this year and is a severely undervalued component of the impending 4th Industrial Revolution. SPLK has fallen nearly 50% from its high last September, driven by soft guidance and a valuation reset in tech as interest rates rise from record low levels.

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According to Zacks Consensus estimates, SPLK is expected to report an EPS of -$0.72 on sales of $492.9 million, which would represent an EPS decline of 28.5%, but a sales increase of 13.5%. Analysts are projecting SPLK to have its most unprofitable quarter on record following weak guidance from management 3 months prior.

I believe that these expectations are conservative, and SPLK is a good buy before earnings are released this evening. Keep in mind this trade bears considerable risk because anything could happen in a quarterly release. Still, I am optimistic about its positioning and would consider starting a small position.

Final Thoughts

According to CEO Doug Merritt, "Splunk is one of the fastest-growing companies in the history of enterprise software." Tomorrow, Splunk has the opportunity to demonstrate to the markets that they are a vital component to the tech tidal wave that we are standing at the precipice of as the Roaring 20s truly commence.

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