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Bull Of The Day: Appian (APPN)

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Appian (APPN - Free Report) is a Zacks Rank #1 (Strong Buy) that has a F for Value and an C for Growth.  process management, case management and mobile application development.  The story here is a consistent growth and a flip to profitability in 2025.

Description

Appian Corporation provides low-code software development platform which enables organizations to develop various applications primarily in the United States and internationally. The Company's products include business process management software, case management, mobile application development and platform as a service. It serves financial services, healthcare, government, telecommunications, media, energy, manufacturing and transportation organizations. Appian Corporation is headquartered in Reston, Virginia.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

Appian (APPN - Free Report) has a good earnings history with the company topping the Zacks Consensus Estimate in 3 of the last 4 quarters. 

The most recent earnings print saw the company posted a gain of 15 cents when a loss of 9 cents was expected.

Over the last four quarters the average earnings surprise works out to be 86%.

Earnings Estimates Revisions

Earnings estimate revisions is what the Zacks Rank is all about. 

Estimates are moving higher for APPN.

Following the recent beat, the estimates for this quarter and next have decreased.

The consensus has moved from $0.04 to a loss of $0.01 over the last 60 days.

Next quarter has slipped from $0.03 to $0.02.

The full year 2024 estimate is up from a loss of $0.54 to a loss of  $0.3.6.

Next year increased from $0.12 to  $0.18.

All of the estimate moves have come in the last 60 days.

Growth

I see revenue in 2024 will come in around $614M which would be good 12.6% growth.

2025 is calling for sales of $679M which represents 10.5% growth.

The most recent quarter saw growth of 12.4%.

Valuation

The forward PE stands at 187x which is super high, but this often the case when a company flips to profitability as the earnings tend to start off slowly and are very low, thus giving a very high multiple.  The price to book is an NA right now on the Zacks site.  Price to sales comes in a 4.76x which could easily double if we see good topline growth in 2025.

Margins are the driver here as the most recent quarter saw a better than 500 basis point move.  Going from -15% to -9.8% is a great step in the right direction and later in the year this number will turn positive.


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