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Pure Storage (PSTG) Gains 39.4% YTD: Will the Trend Continue?
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Pure Storage (PSTG - Free Report) is witnessing healthy momentum this year so far. Shares of the company have gained 39.4% year to date compared with the S&P 500 Composite growth of 15.1%.
The company offers Cloud Data Services, a suite of new cloud offerings that aids customers to invest in single storage architecture. Also, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company is likely to benefit from the growing demand for its FlashArray and FlashBlade businesses, as well as strong growth prospects in the data-driven market of machine learning bode well.
The company continues to invest heavily in research and development to launch new products and enhance its existing product line. In June, the company announced the launch of its FlashArray//E to further expand its disk replacement-focused Pure//E family. It will help customers to reduce costs and e-waste. On the same day, the company announced the launch of its FlashArray//X and FlashArray//C R4 models to help customers boost performance for business-critical workloads and reduce costs.
The company continues to benefit from the rising customer base. In the last reported quarter, Pure Storage added more than 276 customers. The company’s customer base includes 58% of Fortune 500 companies.
PSTG outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 50.2%, on average. The company has impressive long-term earnings per share (EPS) growth expectation of 15.2% compared with the industry’s growth rate of 13.8%.
The company also has a steady share repurchase program. In the fiscal first quarter, the company returned $70 million to shareholders by repurchasing 2.9 million shares. The company has $211 million left from its previously announced $250 million share-repurchase plan.
Going ahead, the company expects revenues to be $680 million for second-quarter fiscal 2024, representing a rise of 5% from the year-ago reported figure. The non-GAAP operating income for the fiscal second quarter is expected to be $90 million. The non-GAAP operating margin is expected to be 13%.
In the last reported quarter, the company reported non-GAAP EPS of 8 cents in first-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 100%. The company reported non-GAAP EPS of 25 cents in the prior-year quarter.
However, weakness in global macroeconomic conditions and cutbacks in spending by clients are likely to affect the company’s performance. Also, rising costs on product enhancements, acquisitions, and research and development are likely to exert pressure on margin expansion.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 15.9% in the past 60 days to $4.15.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 25% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 8% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 64.3% in the past year.
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Pure Storage (PSTG) Gains 39.4% YTD: Will the Trend Continue?
Pure Storage (PSTG - Free Report) is witnessing healthy momentum this year so far. Shares of the company have gained 39.4% year to date compared with the S&P 500 Composite growth of 15.1%.
The company offers Cloud Data Services, a suite of new cloud offerings that aids customers to invest in single storage architecture. Also, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company is likely to benefit from the growing demand for its FlashArray and FlashBlade businesses, as well as strong growth prospects in the data-driven market of machine learning bode well.
The company continues to invest heavily in research and development to launch new products and enhance its existing product line. In June, the company announced the launch of its FlashArray//E to further expand its disk replacement-focused Pure//E family. It will help customers to reduce costs and e-waste. On the same day, the company announced the launch of its FlashArray//X and FlashArray//C R4 models to help customers boost performance for business-critical workloads and reduce costs.
The company continues to benefit from the rising customer base. In the last reported quarter, Pure Storage added more than 276 customers. The company’s customer base includes 58% of Fortune 500 companies.
PSTG outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 50.2%, on average. The company has impressive long-term earnings per share (EPS) growth expectation of 15.2% compared with the industry’s growth rate of 13.8%.
The company also has a steady share repurchase program. In the fiscal first quarter, the company returned $70 million to shareholders by repurchasing 2.9 million shares. The company has $211 million left from its previously announced $250 million share-repurchase plan.
Going ahead, the company expects revenues to be $680 million for second-quarter fiscal 2024, representing a rise of 5% from the year-ago reported figure. The non-GAAP operating income for the fiscal second quarter is expected to be $90 million. The non-GAAP operating margin is expected to be 13%.
In the last reported quarter, the company reported non-GAAP EPS of 8 cents in first-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 100%. The company reported non-GAAP EPS of 25 cents in the prior-year quarter.
However, weakness in global macroeconomic conditions and cutbacks in spending by clients are likely to affect the company’s performance. Also, rising costs on product enhancements, acquisitions, and research and development are likely to exert pressure on margin expansion.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Aspen Technology (AZPN - Free Report) and Badger Meter (BMI - Free Report) . Woodward presently sports a Zacks Rank #1 (Strong Buy), whereas Aspen Technology and Badger Meter currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 15.9% in the past 60 days to $4.15.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 25% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 8% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 64.3% in the past year.