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Nicholas Kitonyi
Nicholas Kitonyi
Articles (404)  | Author's Website |

Should You Bet on Cloudera's Exciting Growth?

The stock is up 160%

December 31, 2020 | About:

Shares of application software company Cloudera Inc. (NYSE:CLDR) are up more than 160% since bottoming in March. However, when we factor in the sharp decline experienced earlier this year, the company's net gain in 2020 is just 20%.

The company operates in the data analytics and management industry. It offers its products to businesses through both private and public clouds. Cloudera is looking to seize the opportunity created by the growing need for big data analytics software in the market.

Cloudera's data science and engineering segment enables organizations to streamline, simplify and scale big data processing, which speeds up the decision-making process.

Data is a key asset in the modern business environment. Therefore, the quicker an organization can process it and retrieve the information, the more likely it will be able to make timely decisions that can give it the edge in a highly competitive environment.

Cloudera's products will continue to play a key role in helping businesses to strategize and execute their plans in the foreseeable future.

A look at the numbers

Cloudera's top and bottom lines continued to grow in the most recent quarterly results released at the start of the month. The company posted a 600% year-over-year growth in adjusted earnings per share to 15 cents, which beat the consensus analyst expectation of 9 cents.

Cloudera's top line grew by 9.9% from the same period last year to $217.9 million, which again was better than the Street estimate of about $209.2 million.

Revenue for the nine-month period ended Oct. 31 came in at $642.7 million, up from last year's equivalent of $582.5 million. Adjusted net loss per share for the same period stood at 3 cents.

The company remains unprofitable on a trailing 12-month basis. However, given its current growth trajectory, it appears to be on course to break even by the end of the fiscal 2021. This makes it an interesting prospect for those looking for growth stocks going into next year.

Valuation

From a valuation perspective, Cloudera is expected to post a positive cumulative bottom line in the next 12 months. As such, it has a forward 12-month price-earnings ratio of 32.36, which is better than close peer Alteryx Inc.'s (NYSE:AYX) equivalent of 185.13.

The company's current ratio of 1.23 is also better than Alteryx's equivalent of 4.09, while another close peer, Snowflake Inc.'s (NYSE:SNOW), current debt position puts its current ratio at 9.11.

However, both Snowflake and Alteryx have more cash to spend, with $4.75 billion and $723 million. Cloudera's current cash position based on its fiscal third-quarter results is $394 million. This puts Snowflake and Alteryx in a better position to capitalize on new opportunities as they crop up.

In summary, Cloudera appears to be on an exciting growth trajectory. The company is now on course to book an annual profit within the next 12 months. However, its peers appear to be better positioned for long-term growth given the cash they have on their books.

Disclosure: No positions in the stocks mentioned.

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About the author:

Nicholas Kitonyi
Nicholas is the founder of CAGR Value. He is a financial analyst with extensive experience in investment research and stock market analysis. His analysis has been featured on several research sites.

Nicholas has solid knowledge of both U.S. and European markets. His investment style is focused on undervalued plays and growth stocks. Nicholas classifies himself as a swing trader and likes to trade GBP/USD, gold and FTSE 100, among other liquid instruments.

Visit Nicholas Kitonyi's Website


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