by Ian Harvey
November 22, 2019
Splunk reported third-quarter results Thursday that beat on the top and bottom line, as did its outlook.
“Stock Options Made Easy” “Earnings Predictions” members were already up 96% potential profits before earnings. After the market opened today the P.P. climbed to 232%.
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SPLK reported third-quarter earnings after the market closed yesterday beating revenue of the highest analyst estimate. The stock had gained as much as 7.6% reporting.
The data-software company reported adjusted earnings of 58 cents a share on revenue of $626.3 million. That compared with estimates of 54 cents and $603.7 million. Free cash flow in the quarter was negative $162 million. Analysts on average had been expecting negative cash flow of $131.6 million.
This quarterly report represents an earnings surprise of 11.54%.
Over the last four quarters, the company has surpassed consensus EPS and revenue estimates four times.
“The rate of expansion that we’re seeing within our customers is really exciting and impressive,” Chief Executive Officer Doug Merritt said in an interview. “There’s a strong understanding that these folks have got to continue to spend on technology if they want to either grow or weather any storm that might be thrown at them.”
Splunk shares have added about 20.9% since the beginning of the year versus the S&P 500's gain of 24%.
“Stock Options Made Easy” “Earnings Predictions” members were advised to buy Splunk call options on Monday, November 18, 2019, and pre-earnings were already up potential profits of 96%.
After trading opened today the potential profit is now sitting at 232%.
The Recommended Trade on Splunk.....
"The data analytics software provider Splunk Inc. (NASDAQ:SPLK) that delivers usable insights into digital systems -- everything from websites and apps to servers and mobile devices, will report earnings after the market closes. The consensus earnings estimate is $0.54 per share on revenue of $603.41 million; but the Whisper number is higher at $0.61 per share.
The company's guidance was for revenue of approximately $600.00 million. Consensus estimates are for year-over-year earnings growth of 63.64% with revenue increasing by 25.45%.
For the last reported quarter, it was expected that Splunk would post earnings of $0.12 per share when it actually produced earnings of $0.30, delivering a surprise of +150%.
Over the last four quarters, the company has beaten consensus EPS estimates four times.....read more.....
.....Short interest has decreased by 3.6% since the company's last earnings release.
One analyst has rated the stock with a sell rating, eight have issued a hold rating and twenty-three have given a buy rating to the company. The stock has a consensus rating of “Buy” and a consensus price target of $148.59."
Option trade to consider: Buy the SPLK DEC 20 2019 120.000 CALL at approximately $5.60.
YOU NEED TO BE IN TO PROFIT!
Influencing Factors for Splunk.....
The company is a pioneer in the field of providing software that helps organizations search, correlate, analyze, monitor and report on data in real time.
"With the shift to a renewable model largely complete, momentum in our term license and cloud offerings drove 53% growth in total [annual recurring revenue] during the quarter," Chief Financial Officer Jason Child said in a statement.
Splunk recently began offering volume-based pricing tiers and is starting to charge customers annually rather than on a multi-year basis. Those billing changes contributed to a reduced free cash flow forecast in August, and Wall Street analysts have been concerned about how long that pressure will linger. But Splunk’s pricing changes have been well received by customers.
Splunk completed a $1 billion purchase of SignalFX in October, its largest deal to date. The company will “continue to lean in hard” on acquisitions, in addition to organic growth and partnerships.
For the fourth quarter, the company expects revenue of about $780 million, according to the Splunk earnings report. That's above analyst estimates for $768.4 million.
Splunk also raised its outlook for the year. It now expects revenue of approximately $2.35 billion, up from prior guidance of $2.3 billion.
"Splunk is transforming the way our customers around the world turn data into doing," Chief Executive Doug Merritt said in written remarks with the earnings release.
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The questions remain......Where is Splunk headed now?
Will we recommend another options trade on Splunk?
What will “Stock Options Made Easy” advise members to do?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!