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Cloudflare (NET) Dips More Than Broader Markets: What You Should Know

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Cloudflare (NET - Free Report) closed at $64.83 in the latest trading session, marking a -0.96% move from the prior day. This move lagged the S&P 500's daily loss of 0.57%. Meanwhile, the Dow lost 0.05%, and the Nasdaq, a tech-heavy index, lost 1.04%.

Prior to today's trading, shares of the web security and content delivery company had lost 0.27% over the past month. This has lagged the Computer and Technology sector's gain of 3.87% and the S&P 500's gain of 0.64% in that time.

Cloudflare will be looking to display strength as it nears its next earnings release. On that day, Cloudflare is projected to report earnings of $0.10 per share, which would represent year-over-year growth of 66.67%. Our most recent consensus estimate is calling for quarterly revenue of $330.54 million, up 30.21% from the year-ago period.

NET's full-year Zacks Consensus Estimates are calling for earnings of $0.36 per share and revenue of $1.29 billion. These results would represent year-over-year changes of +176.92% and +31.76%, respectively.

Investors might also notice recent changes to analyst estimates for Cloudflare. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.59% higher. Cloudflare is currently a Zacks Rank #3 (Hold).

Investors should also note Cloudflare's current valuation metrics, including its Forward P/E ratio of 183.69. For comparison, its industry has an average Forward P/E of 39.27, which means Cloudflare is trading at a premium to the group.

It is also worth noting that NET currently has a PEG ratio of 3.43. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Software industry currently had an average PEG ratio of 1.69 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 91, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks 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

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