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Friday, September 25, 2020

Elastic N.V. (NYSE:ESTC) on the Path to Ruin

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The Elastic N.V. (ESTC) shares are trading at lower $88.93 and the avg recommendation for the stock is Strong Buy. while the current analyst price target stands at $97.38.

To add more color to this target, the company’s high over the last year is $104.10 and the low is $39.01. Over the last 52 weeks, ESTC is down -14.57% while the S&P 500 is up 1.30%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, ESTC reported a profit of $89.35 million. Elastic N.V. also saw revenues increase to $123.62 million. In addition, ESTC has free cash flow of -$35.63 million as of 04-2020. The company’s EBITDA came in at -$22.55 million which compares well with its peers.

ESTC booked profit margins of -39.10%, its Return on Equity (ROE) is -44.00%, and its Return on Assets is -23.70%. All told, it is clear that, ESTC needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. ESTC has a short ratio of 4.67 and outstanding shares of 82.06M.

Company Outlook

ESTC has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 0.95 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at -2.13. Elastic N.V. ESTC also noted assets of $803.91 million at the end of the last quarter. Investors should also keep an eye on sector updates as ESTC has historically followed its peers on positive news.

All told, Elastic N.V. ESTC has strung together solid data and demonstrated underlying fundamentals. At its current valuation, ESTC represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Elastic N.V. ESTC is now commanding a market cap of 7.83B and a float of 63.46M. ESTC is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of ESTC stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in ESTC, either long or short, and we have not been compensated for this article.

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