SALE EXTENDED
MarketBeat All Access
Start your 30-day free trial,
then continue your subscription for 50% off.
TODAY ONLY!
Claim Your Discount
×
S&P 500   3,744.52
DOW   29,926.94
QQQ   279.76
Free Webinar | October 11: How to Break Barriers
Live Updates: Russia-Ukraine War
Box Inc. Stock on Track to Become a Q4 Winner
3 Stocks With Market-Beating Price Performance
Don’t Chase American Virtual Cloud Technologies Higher
Is Ford's Revenue Enough to Juice its Stock Price?
Will WWE Shares Wrestle Their Way Higher or Will They Tap Out?
S&P 500   3,744.52
DOW   29,926.94
QQQ   279.76
Free Webinar | October 11: How to Break Barriers
Live Updates: Russia-Ukraine War
Box Inc. Stock on Track to Become a Q4 Winner
3 Stocks With Market-Beating Price Performance
Don’t Chase American Virtual Cloud Technologies Higher
Is Ford's Revenue Enough to Juice its Stock Price?
Will WWE Shares Wrestle Their Way Higher or Will They Tap Out?
S&P 500   3,744.52
DOW   29,926.94
QQQ   279.76
Free Webinar | October 11: How to Break Barriers
Live Updates: Russia-Ukraine War
Box Inc. Stock on Track to Become a Q4 Winner
3 Stocks With Market-Beating Price Performance
Don’t Chase American Virtual Cloud Technologies Higher
Is Ford's Revenue Enough to Juice its Stock Price?
Will WWE Shares Wrestle Their Way Higher or Will They Tap Out?
S&P 500   3,744.52
DOW   29,926.94
QQQ   279.76
Free Webinar | October 11: How to Break Barriers
Live Updates: Russia-Ukraine War
Box Inc. Stock on Track to Become a Q4 Winner
3 Stocks With Market-Beating Price Performance
Don’t Chase American Virtual Cloud Technologies Higher
Is Ford's Revenue Enough to Juice its Stock Price?
Will WWE Shares Wrestle Their Way Higher or Will They Tap Out?

Will Crowdstrike Get A Boost From Increased EPS Guidance?

Key Points

  • Like other techs, Crowdstrike has been slammed by higher interest rates
  • The company has been using debt to grow; higher rates may hurt that strategy
  • It boosted earnings and revenue guidance for Q3 and the full year 

Will Crowdstrike Get A Boost From Increased EPS Guidance?Cybersecurity specialist Crowdstrike (NASDAQ: CRWD) had a terrific run in 2020 and into 2021, but along with other techs, this former growth-stock favorite has been languishing.

But much of that decline is due to interest-rate increases, along with the broader market pullback. 

What’s the longer-term potential for the stock? 

First, a little background: Crowdstrike went public at $34 in June 2019. Shares closed Thursday at $161.28, so there’s no immediate risk of Crowdstrike joining the ranks of newly public techs sinking beneath their IPO prices. (And yes, a stock that went public in 2019 is still new; in fact, companies that IPO’d in the past 10 to 15 years are very much in the running for notching big price gains in a bull market.)

Its market cap is currently $37.64 billion, behind only Palo Alto Networks (NASDAQ: PANW) and Fortinet (NASDAQ: FTNT), when it comes to other cybersecurity names. 

It’s certainly true that cybersecurity isn’t an industry that’s likely to shrink anytime soon, but techs tend to suffer when interest rates are on the rise. That’s because techs and other growth companies tend to invest profits back into high-potential projects rather than returning money to shareholders in the form of a dividend. Higher rates can impede that ability, meaning growth prospects can slow. That’s especially damaging for stocks with high price-to-earnings ratios, which you often see with tech stocks.


Using Leverage To Grow

Crowdstrike has long-term debt of $740.261 million. It’s not unusual to see fast-moving techs use leverage to finance growth. Higher interest rates also mean increased costs of borrowing, which can also put a damper on growth. In fact, the stock skidded more than 5% this week, following the Federal Reserve’s rate hike.

There’s been good news for the company, however. On August 30, earnings for the second quarter of fiscal 2023 came in at $0.36 per share on revenue of $535.2 million. MarketBeat earnings data show that Crowdstrike has beaten revenue views every quarter since going public. It’s topped earnings views in every quarter since its first one as a public company.

Earnings have grown at triple-digit rates in each of the past eight quarters, while revenue grew at high double-digit rates.

Crowdstrike Lifted Guidance 

The company boosted its guidance for the third quarter. It now expects earnings per share in a range between $0.30 to $0.32, higher than analysts had expected. 

It guided toward revenue between $569.10 million and $575.90 million, lower than consensus estimates. Still, that would mark a significant increase over the year-earlier quarter. 

For the full year, Crowdstrike sees earnings between $1.31 and $1.33 per share, roughly double fiscal 2022’s earnings. 

Within the cybersecurity industry, Crowdstrike has some competition when it comes to price action. 

Small-Cap Cybersecurity Names

Absolute Software (NASDAQ: ABST), a small cap that develops and sells software to manage and secure devices, apps, data, and networks for enterprise customers, is up 36.19% in the past three months and 17.40% year-to-date. 

This company, too, is a recent IPO, having gone public in October 2020. However, with a market cap of just $550.9 million, it’s not an institutional quality stock like Crowdstrike, Palo Alto Networks, or Fortinet. The larger owners, with the exception of funds focusing on small caps, gravitate towards larger companies that tend to be more stable and have more analyst coverage. 

Sometimes very small companies from all industries emerge as price leaders. That’s due to factors including being new and having an agile management team incentivized to pursue growth. 

Within the cybersecurity industry, Intrusion (NASDAQ: INTZ) is an example of that phenomenon. The stock is up 21.29% in the past three months and 30.81% so far this year. But with a market capitalization of just $86.9 million, it’s also not an institutional quality stock. 

Unless you are specifically seeking small-cap exposure, which is appropriate in many situations, you’ll generally find more stable opportunities among the larger names within an industry. 

Should you invest $1,000 in CrowdStrike right now?

Before you consider CrowdStrike, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CrowdStrike wasn't on the list.

While CrowdStrike currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
CrowdStrike (CRWD)
2.3621 of 5 stars
$178.39+1.0%N/A-237.85Moderate Buy$241.76
Palo Alto Networks (PANW)
0 of 5 stars
$174.75-0.5%N/AN/ABuy$414.67
Fortinet (FTNT)
3.2544 of 5 stars
$53.74+0.3%N/A66.35Moderate Buy$71.96
Intrusion (INTZ)
1.3086 of 5 stars
$5.44+10.8%N/A-5.67Hold$4.33
Absolute Software (ABST)
2.3607 of 5 stars
$11.97-3.6%2.09%-24.94Buy$16.00
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.

MarketBeat Resources

Premium Research Tools

MarketBeat All Access members have access to premium reports, best-in-class portfolio monitoring tools, and our latest stock picks.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies, and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau MarketBeat is rated as Great on TrustPilot

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | contact@marketbeat.com | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Privacy Policy | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart's disclaimer.