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Here's Why Investors Should Consider Buying Pure Storage (PSTG)
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Pure Storage Inc (PSTG - Free Report) appears to be a promising stock to add to the portfolio in tackling the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.
Let’s look at the factors that make the stock an attractive pick:
Shares Outperformed: Wall Street is facing extreme volatility due to macroeconomic factors such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.
The above-mentioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fell 16.2%.
The stock is down 27.8% from its 52-week high level of $36.71 on Mar 28, 2022, making it relatively affordable for investors. PSTG has declined 3.9% in the past year against a 30.8% plunge in the Zacks sub-industry.
Image Source: Zacks Investment Research
Positive Earnings Surprise History: PSTG has an impressive surprise record. Earnings outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 155.8%.
Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 and a Growth Score of A or B offer solid investment opportunities.
Upbeat Guidance: For fiscal 2023, Pure Storage expects revenues of $2.75 billion, indicating year-over-year growth of 26%. The non-GAAP operating income is expected to be $430 million, and the non-GAAP operating margin is expected to be 15.6%.
Pure Storage expects revenues of $810 million for fourth-quarter fiscal 2023, indicating growth of 14% from the year-ago reported figure. The non-GAAP operating income for the fiscal fourth quarter is expected to be $130 million.
Robust Estimates: The Zacks Consensus Estimate for 2023 and 2024 earnings is pegged at $1.28 and $1.30, which indicates a year-over-year increase of 77.8% and 1.4%, respectively.
Also, revenues for 2023 and 2024 are estimated to be $2.75 billion and $3.12 billion, indicating year-over-year growth of 26.3% and 13.4%, respectively.
Pure Storage reported non-GAAP earnings of 31 cents per share in third-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 19.2% and increased 40.9% on a year-over-year basis.
Total revenues increased 20% from the year-ago reported quarter to $676.1 million. Moreover, the top line surpassed the Zacks Consensus Estimate by 0.6%.
Strong Fundamental Drivers
Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. The company is likely to benefit from the growing demand for its FlashArray and FlashBlade businesses, as well as strong growth prospects in the data-driven market of machine learning (ML) bode well.
The company continues to invest heavily in research and development to launch new products and enhance its existing product line. In October 2022, the company launched Portworx Enterprise 3.0, a new fully managed service for Portworx Enterprise designed to extend the Kubernetes-ready data plane to every developer working on containerized applications.
The company continues to benefit from the rising customer base. In the last-reported quarter, Pure Storage added more than 390 customers. The company’s customer base includes 58% of Fortune 500 companies.
The company has impressive long-term earnings per share growth expectation of 21.3% compared with the industry’s growth rate of 18.1%.
The company also has a steady share repurchase program. In the fiscal third quarter, the company returned $24.5 million to shareholders by repurchasing 0.9 million shares. The company has approximately $100 million under the $250 million share-repurchase plan.
As of Nov 6, 2022, the company had $1.5 billion in cash, cash equivalents and marketable securities with no long-term debt. The company’s total debt-to-capital ratio is 41% at the end of the fiscal third quarter, reflecting a year-over-year improvement from 52%.
The company’s solid liquidity and cash flow make it attractive to investors and help the company to continue its steady capital deployment.
Few Headwinds
Apart from its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive flash-based storage market. This is likely to negatively impact the company’s performance.
Also, supply chain troubles and uncertainty prevailing over global macroeconomic conditions are major concerns.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Calix (CALX - Free Report) , each currently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for Arista Networks 2022 earnings is pegged at $4.37 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 10.1% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.31 per share, rising 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 8.7% in the past year.
The Zacks Consensus Estimate for Calix’s 2022 earnings is pegged at $1.06 per share, unchanged in the past 60 days.
Calix’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 19%. Shares of CALX have soared 17.2% in the past year.
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Here's Why Investors Should Consider Buying Pure Storage (PSTG)
Pure Storage Inc (PSTG - Free Report) appears to be a promising stock to add to the portfolio in tackling the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.
Let’s look at the factors that make the stock an attractive pick:
Shares Outperformed: Wall Street is facing extreme volatility due to macroeconomic factors such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.
The above-mentioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fell 16.2%.
The stock is down 27.8% from its 52-week high level of $36.71 on Mar 28, 2022, making it relatively affordable for investors. PSTG has declined 3.9% in the past year against a 30.8% plunge in the Zacks sub-industry.
Image Source: Zacks Investment Research
Positive Earnings Surprise History: PSTG has an impressive surprise record. Earnings outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 155.8%.
Solid Rank: PSTG has the favorable combination of a Growth Score of A and currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 and a Growth Score of A or B offer solid investment opportunities.
Upbeat Guidance: For fiscal 2023, Pure Storage expects revenues of $2.75 billion, indicating year-over-year growth of 26%. The non-GAAP operating income is expected to be $430 million, and the non-GAAP operating margin is expected to be 15.6%.
Pure Storage expects revenues of $810 million for fourth-quarter fiscal 2023, indicating growth of 14% from the year-ago reported figure. The non-GAAP operating income for the fiscal fourth quarter is expected to be $130 million.
Robust Estimates: The Zacks Consensus Estimate for 2023 and 2024 earnings is pegged at $1.28 and $1.30, which indicates a year-over-year increase of 77.8% and 1.4%, respectively.
Also, revenues for 2023 and 2024 are estimated to be $2.75 billion and $3.12 billion, indicating year-over-year growth of 26.3% and 13.4%, respectively.
Pure Storage reported non-GAAP earnings of 31 cents per share in third-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 19.2% and increased 40.9% on a year-over-year basis.
Total revenues increased 20% from the year-ago reported quarter to $676.1 million. Moreover, the top line surpassed the Zacks Consensus Estimate by 0.6%.
Strong Fundamental Drivers
Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. The company is likely to benefit from the growing demand for its FlashArray and FlashBlade businesses, as well as strong growth prospects in the data-driven market of machine learning (ML) bode well.
The company continues to invest heavily in research and development to launch new products and enhance its existing product line. In October 2022, the company launched Portworx Enterprise 3.0, a new fully managed service for Portworx Enterprise designed to extend the Kubernetes-ready data plane to every developer working on containerized applications.
The company continues to benefit from the rising customer base. In the last-reported quarter, Pure Storage added more than 390 customers. The company’s customer base includes 58% of Fortune 500 companies.
The company has impressive long-term earnings per share growth expectation of 21.3% compared with the industry’s growth rate of 18.1%.
The company also has a steady share repurchase program. In the fiscal third quarter, the company returned $24.5 million to shareholders by repurchasing 0.9 million shares. The company has approximately $100 million under the $250 million share-repurchase plan.
As of Nov 6, 2022, the company had $1.5 billion in cash, cash equivalents and marketable securities with no long-term debt. The company’s total debt-to-capital ratio is 41% at the end of the fiscal third quarter, reflecting a year-over-year improvement from 52%.
The company’s solid liquidity and cash flow make it attractive to investors and help the company to continue its steady capital deployment.
Few Headwinds
Apart from its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive flash-based storage market. This is likely to negatively impact the company’s performance.
Also, supply chain troubles and uncertainty prevailing over global macroeconomic conditions are major concerns.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Calix (CALX - Free Report) , each currently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for Arista Networks 2022 earnings is pegged at $4.37 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 10.1% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.31 per share, rising 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 8.7% in the past year.
The Zacks Consensus Estimate for Calix’s 2022 earnings is pegged at $1.06 per share, unchanged in the past 60 days.
Calix’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 19%. Shares of CALX have soared 17.2% in the past year.