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Cloudflare (NET) Stock Declines While Market Improves: Some Information for Investors

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Cloudflare (NET - Free Report) closed the latest trading day at $84.32, indicating a -0.62% change from the previous session's end. The stock's performance was behind the S&P 500's daily gain of 0.17%. On the other hand, the Dow registered a loss of 0.05%, and the technology-centric Nasdaq increased by 0.2%.

The web security and content delivery company's stock has climbed by 15.16% in the past month, exceeding the Computer and Technology sector's gain of 4.37% and the S&P 500's gain of 4.71%.

The investment community will be closely monitoring the performance of Cloudflare in its forthcoming earnings report. In that report, analysts expect Cloudflare to post earnings of $0.12 per share. This would mark year-over-year growth of 100%. At the same time, our most recent consensus estimate is projecting a revenue of $352.69 million, reflecting a 28.39% rise from the equivalent quarter last year.

NET's full-year Zacks Consensus Estimates are calling for earnings of $0.46 per share and revenue of $1.29 billion. These results would represent year-over-year changes of +253.85% and +31.94%, respectively.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Cloudflare. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. At present, Cloudflare boasts a Zacks Rank of #3 (Hold).

From a valuation perspective, Cloudflare is currently exchanging hands at a Forward P/E ratio of 186.48. Its industry sports an average Forward P/E of 39.53, so one might conclude that Cloudflare is trading at a premium comparatively.

Meanwhile, NET's PEG ratio is currently 3.49. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As of the close of trade yesterday, the Internet - Software industry held an average PEG ratio of 1.81.

The Internet - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 31, placing it within the top 13% of over 250 industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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