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CommVault and Atlassian have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – November 7, 2023 – Zacks Equity Research shares CommVault Systems (CVLT - Free Report) as the Bull of the Day and Atlassian (TEAM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on National CineMedia, Inc. (NCMI - Free Report) , AirSculpt Technologies, Inc. (AIRS - Free Report) and Duolingo, Inc. (DUOL - Free Report) .
Following its impressive fiscal second-quarter report in late October investors may want to take notice of CommVault Systems stock which currently sports a Zacks Rank #1 (Strong Buy) and lands the Bull of the Day. CommVault Provides Unified Data Management solutions for high-performance data protection and has been taking advantage of a strengthening business environment as the Zacks Computer-Software Industry is currently in the top 26% of over 250 Zacks industries.
Strong Momentum
In addition to its Zacks Rank #1 (Strong Buy), CommVault’s stock has an “A” Zacks Style Scores grade for Momentum after beating Q2 top and bottom line expectations on Friday, October 31.
CommVault’s Q2 earnings of $0.70 per share beat the Zacks Consensus of $0.65 a share by 7%. More impressive, Q2 earnings soared 23% year over year with sales of $201 million topping estimates by 3% and rising 7% from the prior-year quarter.
CommVault is building a desirable customer base as recurring revenue of $158.2 million represented 84% of total revenue during the quarter and popped 12% YoY with CEO Sanjay Mirchandani stating the company's comprehensive data protection portfolio has never been more important in today’s increasingly difficult world.
Stellar Growth
CommVault’s stock also sports an “A” Zacks Style Scores grade for Growth with earnings now forecasted to jump 13% in its current fiscal 2024 and climb another 8% in FY25 to $3.12 per share.
Even better, FY25 EPS projections would represent a very stellar 280% increase over the last five years with CommVault’s earnings at $0.82 per share in 2021. Plus, total sales are projected to be up 4% in FY24 and rise another 5% in FY25 to $861.27 million.
Bottom Line
CommVault is turning into a very appealing growth stock and considering the lofty premium many software companies can command in this regard, CVLT trades reasonably at a 23.3X forward earnings multiple. More reassuring, earnings estimates have begun to rise following the company’s strong Q2 results making now an ideal time to buy CommVault’s stock.
Although Atlassian’s stock has soared +33% this year it may be time to take profits or stay on the sidelines. To that point, Atlassian’s stock looks unpleasantly overvalued at current levels landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Cautious Performance Overview
Being a global leader and innovator in the enterprise collaboration and workflow software space there should be much better opportunities to get in on Atlassian’s intriguing growth.
Going forward investors will want to monitor the premium they are paying for TEAM shares which are still down more than -60% over the last two years despite the impressive YTD rally.
Valuation Concerns
Spiking to 52-week highs of $215 a share in September, Atlassian’s stock has now fallen -11% in the last three months. While double-digit percentage growth is forecasted on Atlassian’s top and bottom lines in its current fiscal 2024 and FY25, TEAM shares still trade at an 83.2X forward earnings multiple.
This is a high premium to the Zacks Internet-Software Industry average of 41.7X and uncomfortably above the S&P 500’s 20.4X. Further alluding to premium risk is that Atlassian’s stock trades at 11X forward sales with the industry average P/S at 2.6X and the benchmark at 3.6X.
Bottom Line
For now, more caution is needed when investing in Atlassian’s stock. Currently trading at $173 a share with weaker valuation ratios, Atlassian has joined the list of tech stocks that may be in a bubble following the sharp rebound in the Nasdaq this year.
Additional content:
3 Service Firms Poised to Beat Estimates This Earnings Season
The Zacks Business Services sector has had a strong third quarter of 2023, driven by an improving global macroeconomic environment, strong demand for services, improving supply chains, and strong digital adoption. However, labor market constraints and contracting economic activity in the manufacturing sector remained headwinds.
Per the latest Earnings Trend report, earnings of S&P 500 members of the business services sector that have reported results this season grew 12.1% year over year on 6.9% revenue growth, with 78.9% of the companies beating EPS estimates and 68.4% topping sales projections.
Total quarterly earnings of the S&P 500 members of the sector are currently anticipated to display 9.1% year-on-year growth. Revenues are likely to register a 6.9% rise.
A handful of companies from the sector, like National CineMedia, Inc., AirSculpt Technologies, Inc. and Duolingo, Inc., are expected to beat estimates in the ongoing reporting cycle.
Let us discuss the factors that are likely to have played a key role in shaping the performance of business services companies in the quarter.
Factors Influencing Q3 Results
The sector is a major beneficiary of the broader economy and service activities. According to the "advance" estimate released by the Bureau of Economic Analysis, GDP grew at an annual rate of 4.9% in the third quarter compared with 2.1% growth in the second quarter.
With service activities in the pink, the demand for business services rose steadily. The Services PMI, measured by the Institute for Supply Management, had stayed above the 50% mark for nine consecutive months by the end of the third quarter.
Sector-specific factors that acted as tailwinds in the quarter are the essentiality of certain services like waste management, the rise in demand for risk mitigation and consulting services, increased expertise in improving operational efficiency and lower costs, successful work-from-home models and digital transformation.
Services pertaining to retail trade, mining, utilities, construction, health care & social assistance, finance & insurance, information, educational services, professional, scientific & technical services and transportation & warehousing stayed healthy.
Stocks Poised to Beat This Season
With the existence of several players in the sector, finding the right business services stocks that have the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%.
Here are our picks.
National CineMedia: The company operates a cinema advertising network.
The Zacks Consensus Estimate for NCMI’s top line in the to-be-reported quarter is pegged at $61.05 million, indicating year-over-year growth of 12%. The consensus mark for the bottom line is pegged at a loss of 14 cents, indicating a contraction in loss by 89.2% on a year-over-year basis.
AirSculpt Technologies: The company operates as a holding company for EBS Intermediate Parent LLC that offers body contouring procedure services.
AirSculpt is scheduled to report its third-quarter 2023 results on Nov 10. It has an Earnings ESP of +11.11% and currently carries a Zacks Rank #2.
The consensus mark for revenues in the to-be-reported quarter is pegged at $46.55 million, indicating year-over-year growth of 19.7%. The consensus mark for the bottom line is pegged at 9 cents, indicating an increase of more than 100% on a year-over-year basis.
Duolingo: The company operates a mobile learning platform.
DUOL is scheduled to report its third-quarter 2023 results on Nov 8. It has an Earnings ESP of +35.90% and currently carries a Zacks Rank #3.
The consensus mark for revenues in the to-be-reported quarter is pegged at $131.41 million, indicating year-over-year growth of 36.8%. The consensus mark for the bottom line is pegged at a loss of 8 cents, indicating a contraction in loss by 89.6% on a year-over-year basis.
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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CommVault and Atlassian have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 7, 2023 – Zacks Equity Research shares CommVault Systems (CVLT - Free Report) as the Bull of the Day and Atlassian (TEAM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on National CineMedia, Inc. (NCMI - Free Report) , AirSculpt Technologies, Inc. (AIRS - Free Report) and Duolingo, Inc. (DUOL - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Following its impressive fiscal second-quarter report in late October investors may want to take notice of CommVault Systems stock which currently sports a Zacks Rank #1 (Strong Buy) and lands the Bull of the Day.
CommVault Provides Unified Data Management solutions for high-performance data protection and has been taking advantage of a strengthening business environment as the Zacks Computer-Software Industry is currently in the top 26% of over 250 Zacks industries.
Strong Momentum
In addition to its Zacks Rank #1 (Strong Buy), CommVault’s stock has an “A” Zacks Style Scores grade for Momentum after beating Q2 top and bottom line expectations on Friday, October 31.
CommVault’s Q2 earnings of $0.70 per share beat the Zacks Consensus of $0.65 a share by 7%. More impressive, Q2 earnings soared 23% year over year with sales of $201 million topping estimates by 3% and rising 7% from the prior-year quarter.
CommVault is building a desirable customer base as recurring revenue of $158.2 million represented 84% of total revenue during the quarter and popped 12% YoY with CEO Sanjay Mirchandani stating the company's comprehensive data protection portfolio has never been more important in today’s increasingly difficult world.
Stellar Growth
CommVault’s stock also sports an “A” Zacks Style Scores grade for Growth with earnings now forecasted to jump 13% in its current fiscal 2024 and climb another 8% in FY25 to $3.12 per share.
Even better, FY25 EPS projections would represent a very stellar 280% increase over the last five years with CommVault’s earnings at $0.82 per share in 2021. Plus, total sales are projected to be up 4% in FY24 and rise another 5% in FY25 to $861.27 million.
Bottom Line
CommVault is turning into a very appealing growth stock and considering the lofty premium many software companies can command in this regard, CVLT trades reasonably at a 23.3X forward earnings multiple. More reassuring, earnings estimates have begun to rise following the company’s strong Q2 results making now an ideal time to buy CommVault’s stock.
Bear of the Day:
Although Atlassian’s stock has soared +33% this year it may be time to take profits or stay on the sidelines. To that point, Atlassian’s stock looks unpleasantly overvalued at current levels landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Cautious Performance Overview
Being a global leader and innovator in the enterprise collaboration and workflow software space there should be much better opportunities to get in on Atlassian’s intriguing growth.
Going forward investors will want to monitor the premium they are paying for TEAM shares which are still down more than -60% over the last two years despite the impressive YTD rally.
Valuation Concerns
Spiking to 52-week highs of $215 a share in September, Atlassian’s stock has now fallen -11% in the last three months. While double-digit percentage growth is forecasted on Atlassian’s top and bottom lines in its current fiscal 2024 and FY25, TEAM shares still trade at an 83.2X forward earnings multiple.
This is a high premium to the Zacks Internet-Software Industry average of 41.7X and uncomfortably above the S&P 500’s 20.4X. Further alluding to premium risk is that Atlassian’s stock trades at 11X forward sales with the industry average P/S at 2.6X and the benchmark at 3.6X.
Bottom Line
For now, more caution is needed when investing in Atlassian’s stock. Currently trading at $173 a share with weaker valuation ratios, Atlassian has joined the list of tech stocks that may be in a bubble following the sharp rebound in the Nasdaq this year.
Additional content:
3 Service Firms Poised to Beat Estimates This Earnings Season
The Zacks Business Services sector has had a strong third quarter of 2023, driven by an improving global macroeconomic environment, strong demand for services, improving supply chains, and strong digital adoption. However, labor market constraints and contracting economic activity in the manufacturing sector remained headwinds.
Per the latest Earnings Trend report, earnings of S&P 500 members of the business services sector that have reported results this season grew 12.1% year over year on 6.9% revenue growth, with 78.9% of the companies beating EPS estimates and 68.4% topping sales projections.
Total quarterly earnings of the S&P 500 members of the sector are currently anticipated to display 9.1% year-on-year growth. Revenues are likely to register a 6.9% rise.
A handful of companies from the sector, like National CineMedia, Inc., AirSculpt Technologies, Inc. and Duolingo, Inc., are expected to beat estimates in the ongoing reporting cycle.
Let us discuss the factors that are likely to have played a key role in shaping the performance of business services companies in the quarter.
Factors Influencing Q3 Results
The sector is a major beneficiary of the broader economy and service activities. According to the "advance" estimate released by the Bureau of Economic Analysis, GDP grew at an annual rate of 4.9% in the third quarter compared with 2.1% growth in the second quarter.
With service activities in the pink, the demand for business services rose steadily. The Services PMI, measured by the Institute for Supply Management, had stayed above the 50% mark for nine consecutive months by the end of the third quarter.
Sector-specific factors that acted as tailwinds in the quarter are the essentiality of certain services like waste management, the rise in demand for risk mitigation and consulting services, increased expertise in improving operational efficiency and lower costs, successful work-from-home models and digital transformation.
Services pertaining to retail trade, mining, utilities, construction, health care & social assistance, finance & insurance, information, educational services, professional, scientific & technical services and transportation & warehousing stayed healthy.
Stocks Poised to Beat This Season
With the existence of several players in the sector, finding the right business services stocks that have the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of an earnings surprise is as high as 70%.
Here are our picks.
National CineMedia: The company operates a cinema advertising network.
National CineMedia is set to report its third-quarter 2023 results on Nov 7. It has an Earnings ESP of +114.29% and currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NCMI’s top line in the to-be-reported quarter is pegged at $61.05 million, indicating year-over-year growth of 12%. The consensus mark for the bottom line is pegged at a loss of 14 cents, indicating a contraction in loss by 89.2% on a year-over-year basis.
National CineMedia, Inc. price-eps-surprise | National CineMedia, Inc. Quote
AirSculpt Technologies: The company operates as a holding company for EBS Intermediate Parent LLC that offers body contouring procedure services.
AirSculpt is scheduled to report its third-quarter 2023 results on Nov 10. It has an Earnings ESP of +11.11% and currently carries a Zacks Rank #2.
The consensus mark for revenues in the to-be-reported quarter is pegged at $46.55 million, indicating year-over-year growth of 19.7%. The consensus mark for the bottom line is pegged at 9 cents, indicating an increase of more than 100% on a year-over-year basis.
AirSculpt Technologies, Inc. price-eps-surprise | AirSculpt Technologies, Inc. Quote
Duolingo: The company operates a mobile learning platform.
DUOL is scheduled to report its third-quarter 2023 results on Nov 8. It has an Earnings ESP of +35.90% and currently carries a Zacks Rank #3.
The consensus mark for revenues in the to-be-reported quarter is pegged at $131.41 million, indicating year-over-year growth of 36.8%. The consensus mark for the bottom line is pegged at a loss of 8 cents, indicating a contraction in loss by 89.6% on a year-over-year basis.
Duolingo, Inc. price-eps-surprise | Duolingo, Inc. Quote
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.