JFrog Ltd (FROG, Financial) has recently caught the attention of investors with its notable stock performance. The company's market capitalization stands at a robust $3.52 billion, with the current stock price at $33.54. Over the past week, JFrog's stock has experienced a 3.24% gain, indicating a positive short-term investor sentiment. This upward trend extends over the past three months, with a significant 20.16% gain, showcasing the stock's strong momentum in the market.
When assessing the stock's valuation, the GF Value is a critical metric. Currently, the GF Value is $33.68, which is closely aligned with the stock's current price, suggesting that JFrog is fairly valued at present. This is a shift from three months ago when the stock was considered modestly undervalued with a past GF Value of $36.66. The GF Value, defined by GuruFocus.com, calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates. This shift from undervalued to fairly valued reflects the market's adjustment to JFrog's growth prospects and performance.
Company Overview
JFrog Ltd operates within the competitive software industry, providing a comprehensive end-to-end DevOps platform. This platform is designed to facilitate the continuous, secure delivery of software updates across various systems. With a strong market presence, particularly in Israel, JFrog's product suite includes JFrog Artifactory, JFrog Pipelines, and several other tools that support software development and distribution. The company's focus on streamlining the software supply chain has positioned it as a key player in the DevOps space. 
Assessing Profitability
Despite its market presence, JFrog's Profitability Rank is low at 1/10, indicating challenges in maintaining profitability compared to industry peers. The company's Operating Margin is currently at -25.83%, which, while not ideal, fares better than 22.77% of 2,763 companies in the same sector. In terms of return on equity (ROE), JFrog's -11.55% is higher than 31.3% of its peers. Similarly, its return on assets (ROA) of -8.28% and return on invested capital (ROIC) of -17.43% are better than 31.55% and 25.3% of industry companies, respectively. These figures suggest that while JFrog is not leading in profitability, it is not at the bottom of the pack either. 
Growth Trajectory
JFrog's growth metrics present a more optimistic picture. The company's 3-Year Revenue Growth Rate per Share is an impressive 29.30%, outperforming 83.76% of 2,401 companies in the software industry. Looking ahead, the estimated Total Revenue Growth Rate (Future 3Y To 5Y Est) is 22.78%, which is also higher than 85.97% of the industry. However, the 3-Year EPS without NRI Growth Rate stands at -138.60%, which is only better than 2.44% of 2,006 companies. This indicates that while revenue is growing, profitability is not keeping pace, which could be a concern for long-term investors. 
Investor Holdings
In terms of shareholder composition, Baillie Gifford (Trades, Portfolio) leads with 1,738,114 shares, representing a 1.66% stake in JFrog. Following closely is Jim Simons (Trades, Portfolio), holding 1,398,700 shares, which translates to a 1.33% share percentage. Steven Cohen (Trades, Portfolio) also holds a significant position with 1,034,900 shares, accounting for 0.99% of the company's shares. These top holders reflect a vote of confidence from savvy investors, which could signal a positive outlook for the company's future.
Competitive Landscape
JFrog operates in a competitive environment, with key players like Progress Software Corp (PRGS, Financial) with a market cap of $2.42 billion, Alteryx Inc (AYX, Financial) at $3.41 billion, and Calix Inc (CALX, Financial) at $2.84 billion. These companies, with market capitalizations close to JFrog's, are important benchmarks when evaluating JFrog's market position and performance.
Conclusion
In summary, JFrog Ltd's recent stock performance has been impressive, with a 20.16% gain over the past three months and a current valuation that is in line with its GF Value. While the company's profitability metrics are not leading the industry, its strong revenue growth rates suggest a solid foundation for future expansion. The confidence shown by major shareholders like Baillie Gifford (Trades, Portfolio), Jim Simons (Trades, Portfolio), and Steven Cohen (Trades, Portfolio) adds to the positive sentiment surrounding the stock. Compared to its competitors, JFrog holds its own, with a market cap that competes closely with other industry players. Investors will be watching closely to see if JFrog can translate its revenue growth into improved profitability and sustain its upward trajectory in the stock market.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
