CrowdStrike: Q4 Earnings, Strong Guidance, Puts A Floor On The Stock

CrowdStrike: Q4 Earnings, Strong Guidance, Puts A Floor On The Stock

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CrowdStrike ( CRWD ) continues to delight investors with strong growth prospects. The key takeaway here is that CrowdStrike makes a lot of sense right now, more than in a long while to actually be a stock picker of great securities.

Previously, it didn’t really matter all that much, all you had to do was get exposure to cybersecurity and the market treated it all as ”one-trade”, and everything moved together.

However, right now, more so than in a long time, putting in the work can pay dividends down the road.

Here’s why I make the case that CrowdStrike continues to be an attractive investment. Investor Sentiment Facing Growth Stocks

Data by YCharts The graph above can look a bit overwhelming, but once I explain to you what’s happening, it will be very clear.

There are two types of cybersecurity names listed above. Those that are rapidly growing and consequently expensively valued and the ones that are growing slower, more profitable as a percentage of revenues, and very cheap.

I’ve covered all these names extensively and, as you can see, my thesis has been playing out for some time: the market is starting to discern between where there’s value and where there’s not, or at least, not yet.

And even though over the past year many cybersecurity names have traded as one, often called the ”one-trade”, right now, investors are seeing through the dislocation in the market, and everyone is questioning the underlying values of their portfolio.

Even in the case of Mandiant ( MNDT ), before there was the initial rumor of the Microsoft ( MSFT ) acquisition, which ultimately ended up with Alphabet ( GOOG )( GOOGL ) picking it up, that stock had kept its value much better, given that it had a huge amount of cash on its balance sheet and was looking to repurchase its shares.

In my previous CrowdStrike article, I wrote , SentinelOne which I’ve already briefly mentioned above is priced at 39x forward sales. Obviously, one could remark that SentinelOne is expected to grow at meaningfully faster rates into next year. To that, I would reply that SentinelOne wouldn’t know a profit if it found it on the street. Its most recent results saw negative 40% non-GAAP operating margins. And as you can see from the graph below, including CrowdStrike’s pop after-hours, even over a 90-day period, the gap between CrowdStrike and SentinelOne ( S ) is more than 20% of outperformance. Data by YCharts You can’t trick this market with a clever narrative that your product is superior because it’s an ”out-of-box” cybersecurity containerized workload for enterprise security at scale. The market wants value and you only get to this happening when there’s a massive sell-off, as investors go through their portfolios and consider what’s jam today versus jam tomorrow. CrowdStrike’s Revenue Growth Rates Remain Strong

CrowdStrike revenue growth rates As you can see above, the guidance for Q1 2023 is seriously strong and expected to be up approximately 54% y/y, or perhaps, ultimately ending even slightly higher still.

Furthermore, what’s interesting to note is that CrowdStrike’s guidance was so materially higher than analysts’ expectations. CrowdStrike analyst revenue consensus For Q1 2023, it appears that CrowdStrike’s guidance is pointing to be at approximately 10% higher and for the remainder of the year, analysts were expecting a meaningful slowdown, but as you can see from CrowdStrike’s own guidance, we can reasonably infer that even the later parts of fiscal 2023 CrowdStrike will be growing substantially faster than analysts’ consensus estimates. Why CrowdStrike? Why Now?

CrowdStrike is a cloud-native platform aimed at stopping data breaches. CrowdStrike detects threats and stops breaches.

Further, during the earnings call , we heard how partnering with AWS ( AMZN ) has led to a strong sourcing ground of new customers for CrowdStrike.

We also heard how CrowdStrike’s Falcon flagship product is now expanding into identity protection and how ”cyberspace is center stage joining land, air, sea, and space as the fifth dimension of warfare.” In essence, tailwinds remain strong.

Also, as you’d expect, investors had been troubled that Mandiant’s acquisition by Alphabet could have dampened CrowdStrike’s partnership with Alphabet, but co-founder George Kurtz put investors’ minds to rest stating that this doesn’t meaningfully change much from CrowdStrike’s perspective as Mandiant will be mostly used for internal preempting systems. Q4 2022 investor presentation Moving on, if you’ve followed my work before, you’ve read me say that you need to follow the customer adoption curve. If you have 65% of the Fortune 100 adopting […]

source CrowdStrike: Q4 Earnings, Strong Guidance, Puts A Floor On The Stock

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