Shares of SailPoint Technologies Holdings (SAIL) have been strong performers lately, with the stock up 15.7% over the past month. The stock hit a new 52-week high of $28 in the previous session. SailPoint Technologies Holdings has gained 12.6% since the start of the year compared to the -4.4% move for the Zacks Business Services sector and the 19% return for the Zacks Technology Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 7, 2020, SailPoint Technologies reported EPS of $0.04 versus consensus estimate of $-0.03 while it beat the consensus revenue estimate by 8.35%.
For the current fiscal year, SailPoint Technologies is expected to post earnings of $0.05 per share on $316.22 million in revenues. This represents a -75% change in EPS on a 9.6% change in revenues. For the next fiscal year, the company is expected to earn $0.08 per share on $356.48 million in revenues. This represents a year-over-year change of 62.86% and 12.73%, respectively.
SailPoint Technologies may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
SailPoint Technologies has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 502.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 70.5X versus its peer group's average of 10.3X. Additionally, the stock has a PEG ratio of 33.52. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, SailPoint Technologies currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if SailPoint Technologies meets the list of requirements. Thus, it seems as though SailPoint Technologies shares could have a bit more room to run in the near term.
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SailPoint Technologies Holdings, Inc. (SAIL) : Free Stock Analysis Report
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