The demand for cybersecurity is at near record highs because cyberattacks have become more frequent over the past year. A massive U.S. government and corporate data breach last year, the Colonial Pipeline attack last month, and several other attempts to attack government agencies and corporations have heightened the demand for highly secure cyber security solutions in the United States and globally. In light of these developments, Gartner predicts cybersecurity spending will increase 12.4% year-over-year to $150.40 billion in 2021.
However, investor optimism over the industry’s solid growth prospects has led to valuations that in some cases are inconsistent with companies’ growth potential.
In considering the current financials and growth prospects of CrowdStrike Holdings, Inc. (CRWD – Get Rating), Fortinet, Inc. (FTNT – Get Rating), and Zscaler, Inc. (ZS – Get Rating), we think their shares look extremely overvalued at the current price levels. So, these stocks are best avoided now.
CRWD specializes in cloud-delivered solutions. The company’s Falcon platform offers a set of cloud-delivered technologies that provide a wide range of products that include antivirus, endpoint detection and response (EDR), device control, managed threat hunting, information technology (IT) hygiene, vulnerability management and threat intelligence.
In terms of non-GAAP forward P/E, CRWD is currently trading at 553.77x, 2,018.6% higher than the 26.14 industry average. Its 35.65 forward Price/Sales multiple is 776.4% higher than the 4.07 industry average.
CRWD’s total revenues increased 70.1% year-over-year to $302.84 million in its fiscal first quarter, ended April 30. However, its loss from operations grew 38.9% from the year-ago value to $31.35 million, while its net loss attributable to the company increased 342.5% year-over-year to $85.05 million. The company’s net loss per share increased 322.2% year-over-year to $0.38.
A $1.35 billion consensus revenue estimate for the current year indicates a 54.9% improvement from last year. Analysts expect the company’s EPS to come in at $0.38 in the current year, indicating a 40.7% rise year-over-year.
CRWD has gained 1.6% year-to-date. The stock declined marginally intraday to close yesterday’s trading session at $215.14.
CRWD’s poor prospects are also apparent in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system. CRWD also has a D grade for Value and Stability. It is ranked #11 among the 13 stocks in the F-rated Software – SAAS industry. Click here to view additional CRWD Ratings.
Fortinet, Inc. provides broad, integrated, and automated cybersecurity solutions in the United States and internationally. The Fortinet Security Fabric is a leading cybersecurity platform in the industry and provides security for the most critical challenges in networked, application, cloud, or mobile environments. Fortinet Network Security Institute offers the industry’s largest and broadest cybersecurity training programs.
In terms of non-GAAP forward P/E, FTNT is currently trading at…
Continue reading at STOCKNEWS.com