For more detailed analysis, visit our website: https://www.overlookedalpha.com
CrowdStrike Holdings is an American cybersecurity company based in Austin, Texas.
So far this year the stock has fallen around 26% and is down 47% from its 52-week high.
However, that drop doesn’t necessarily mean the stock is a buy.
With $2.3 billion of cash on the balance sheet and 740 million in debt the company has an enterprise value around 35.1 billion dollars. (That’s roughly the amount you would have to pay if you wanted to buy the whole business outright).
In their latest earnings report, Crowdstrike said it expected full year revenue of 2.2 billion dollars and net income between 313 to 320 million.
Meanwhile free cash flow for 2022 is around 442 million.
Those numbers mean Crowdstrike is trading at 15.7 times revenue, 110 times net income and 79 times 2022 free cash flow.
Those are extremely steep multiples.
But that’s not the whole story because stock based compensation is around 413 million. Add that back and the 320 million net income turns negative.
So the company is generating cash flow but it’s still not profitable.
Then again, Crowdstrike does look like a quality business. Customer retention rates remain over 120% and gross margins are just shy of 80%.
Revenue growth has barely diminished clocking 67% a year over the last few years and free cash flow growth was up 54% year on year. The company now has almost 20,000 subscribers, that's up 51% and it includes 15 of the top 20 US banks.
Also, Cyber Security remains a top industry to be involved in. Businesses aren’t going to cut back on their cyber security spend even in a recession.
Crowdstrike was the first company to build its entire platform in the cloud, its got a high rating on glassdoor and won multiple awards.
Let’s say Crowdstrike can get to 3 billion in net income in 5 years time based on 35 % revenue growth. A 25 times multiple on that would see the company worth around 75 billion dollars in 5 years time. That would be an investment return of 16.5% per year.
So the stock isn't cheap. In this environment, with interest rates going up, Crowdstrike could easily go lower… but it does look like a long term buy.
These are my personal opinions not financial advice. For more detailed analysis visit our website.
#overlookedalpha #investing #stocks
CrowdStrike Holdings is an American cybersecurity company based in Austin, Texas.
So far this year the stock has fallen around 26% and is down 47% from its 52-week high.
However, that drop doesn’t necessarily mean the stock is a buy.
With $2.3 billion of cash on the balance sheet and 740 million in debt the company has an enterprise value around 35.1 billion dollars. (That’s roughly the amount you would have to pay if you wanted to buy the whole business outright).
In their latest earnings report, Crowdstrike said it expected full year revenue of 2.2 billion dollars and net income between 313 to 320 million.
Meanwhile free cash flow for 2022 is around 442 million.
Those numbers mean Crowdstrike is trading at 15.7 times revenue, 110 times net income and 79 times 2022 free cash flow.
Those are extremely steep multiples.
But that’s not the whole story because stock based compensation is around 413 million. Add that back and the 320 million net income turns negative.
So the company is generating cash flow but it’s still not profitable.
Then again, Crowdstrike does look like a quality business. Customer retention rates remain over 120% and gross margins are just shy of 80%.
Revenue growth has barely diminished clocking 67% a year over the last few years and free cash flow growth was up 54% year on year. The company now has almost 20,000 subscribers, that's up 51% and it includes 15 of the top 20 US banks.
Also, Cyber Security remains a top industry to be involved in. Businesses aren’t going to cut back on their cyber security spend even in a recession.
Crowdstrike was the first company to build its entire platform in the cloud, its got a high rating on glassdoor and won multiple awards.
Let’s say Crowdstrike can get to 3 billion in net income in 5 years time based on 35 % revenue growth. A 25 times multiple on that would see the company worth around 75 billion dollars in 5 years time. That would be an investment return of 16.5% per year.
So the stock isn't cheap. In this environment, with interest rates going up, Crowdstrike could easily go lower… but it does look like a long term buy.
These are my personal opinions not financial advice. For more detailed analysis visit our website.
#overlookedalpha #investing #stocks
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NewsTranscript
00:00 Should you buy CrowdStrike stock? With $2.3 billion of cash on the balance sheet and $740
00:06 million in debt, the company has an enterprise value around $35.1 billion.
00:10 In their latest earnings report, CrowdStrike said it expected full year revenue of $2.2
00:15 billion and net income between $313 to $320 million. Those numbers mean CrowdStrike is
00:21 trading at 15.7 times revenue, 110 times net income and 79 times 2022 free cash flow. Those
00:29 are extremely steep multiples.
00:31 Then again, CrowdStrike does look like a quality business. Customer retention rates remain
00:36 over 120% and gross margins are just shy of 80%. Revenue growth has barely diminished,
00:42 clocking 67% a year over the last few years. Free cash flow growth was up 54% year on year.
00:47 The company now has almost 20,000 subscribers, that's up 51%. With interest rates going
00:52 up, CrowdStrike could easily go lower, but it does look like a long term buy.
00:57 These are my personal opinions, not financial advice.