CrowdStrike: Not Comfortable With Margins Growth And Managements' Performance Incentives (Archive)
CrowdStrike’s slowing margins, rich valuation, and misaligned incentives justify a neutral stance.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- I am disappointed by the slow rate of CrowdStrike's margin expansion. Management's performance incentives do not inspire confidence for responsible growth of both the revenues and the P&L.
- CRWD's prospects may be getting priced in as revenue guidance has started missing consensus expectations and Wall St. analysts have almost unanimously downgraded revenue and EPS growth ahead.
- Valuation multiples do not give comfort for buys as the stock is trading at a bit of premium to prior 1-yr fwd P/E levels despite revenue growth moderation.
- Relative technical analysis vs the S&P500 indicates potential underperformance or neutral performance compared to the S&P500 in the coming months and quarters ahead.
- Proof of the company's investment ROI in SG&A and R&D via growth acceleration would cause me to review my thesis.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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