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Can Splunk (SPLK) Stock Emulate '23 Performance This Year?
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Shares of Splunk Inc. surged 77% in 2023 on traction from healthy customer engagement, evident from the competitive win rates alongside solid momentum with large orders overall. Earnings estimates for the current fiscal have soared 69.2% over the past year, while that for the next fiscal are up 63.4%, implying solid inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears primed for a similar performance in 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Growth Drivers
San Francisco, CA-based Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. It enables users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source, and help in operational decision-making.
The healthy demand trends of its software solutions that have a broad range of applications, including security analytics, business analytics and IT operations, have enabled Splunk to strengthen its market position. The valuable insight into machine and big data allows users/enterprises to improve service levels, reduce operational costs, mitigate security risks and maintain compliance. This has become all the more relevant with the vast proliferation of data.
Its software can be deployed in a wide variety of computing environments, from a single laptop to large globally distributed data centers as well as public, private and hybrid cloud environments. The company’s top line is benefiting from the high demand for its cloud solutions. Splunk’s ES (Enterprise Security) solutions also hold promise. Users leverage ES to centralize security management on a single platform and better handle the big data scale of their security operations center.
The company is also benefiting from the ongoing security threats and information and event management replacement cycle. Further, Splunk’s integration with Amazon Web Services (“AWS”) security hub to help customers accelerate detection, investigation and response to potential threats within their AWS security environment is likely to be a key catalyst in the long haul.
The company’s expense-control strategy and focus on improving operational efficiency have supported bottom-line growth. Splunk’s business transition from perpetual licenses to subscription or renewable model is expected to benefit it in the long run. It has been witnessing an increase in the number of renewable term contracts, which is a tailwind. Cloud annual recurring revenues (ARR) in third-quarter fiscal 2024 improved 26% year over year to $2 billion. The company had 851 customers with ARR of more than $1 million.
Splunk delivered an earnings surprise of 99.3%, on average, in the trailing four quarters and has a long-term earnings growth expectation of 29.6%.
Other Key Picks
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 2.2%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 12.5%.
Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches. It is facilitating the seamless transition to super-fast 5G networks, delivering low-power resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, offers the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.
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Can Splunk (SPLK) Stock Emulate '23 Performance This Year?
Shares of Splunk Inc. surged 77% in 2023 on traction from healthy customer engagement, evident from the competitive win rates alongside solid momentum with large orders overall. Earnings estimates for the current fiscal have soared 69.2% over the past year, while that for the next fiscal are up 63.4%, implying solid inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears primed for a similar performance in 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Growth Drivers
San Francisco, CA-based Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. It enables users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source, and help in operational decision-making.
The healthy demand trends of its software solutions that have a broad range of applications, including security analytics, business analytics and IT operations, have enabled Splunk to strengthen its market position. The valuable insight into machine and big data allows users/enterprises to improve service levels, reduce operational costs, mitigate security risks and maintain compliance. This has become all the more relevant with the vast proliferation of data.
Its software can be deployed in a wide variety of computing environments, from a single laptop to large globally distributed data centers as well as public, private and hybrid cloud environments. The company’s top line is benefiting from the high demand for its cloud solutions. Splunk’s ES (Enterprise Security) solutions also hold promise. Users leverage ES to centralize security management on a single platform and better handle the big data scale of their security operations center.
The company is also benefiting from the ongoing security threats and information and event management replacement cycle. Further, Splunk’s integration with Amazon Web Services (“AWS”) security hub to help customers accelerate detection, investigation and response to potential threats within their AWS security environment is likely to be a key catalyst in the long haul.
The company’s expense-control strategy and focus on improving operational efficiency have supported bottom-line growth. Splunk’s business transition from perpetual licenses to subscription or renewable model is expected to benefit it in the long run. It has been witnessing an increase in the number of renewable term contracts, which is a tailwind. Cloud annual recurring revenues (ARR) in third-quarter fiscal 2024 improved 26% year over year to $2 billion. The company had 851 customers with ARR of more than $1 million.
Splunk delivered an earnings surprise of 99.3%, on average, in the trailing four quarters and has a long-term earnings growth expectation of 29.6%.
Other Key Picks
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 2.2%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 12.5%.
Qualcomm is one of the largest manufacturers of wireless chipsets based on baseband technology. The company is focusing on retaining its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches. It is facilitating the seamless transition to super-fast 5G networks, delivering low-power resilient multi-gigabit connectivity with unprecedented range and Qualcomm's best-in-class security. This, in turn, offers the flexibility and scalability needed for broad and fast 5G adoption through accelerated commercialization by OEMs.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.