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Datadog (DDOG) Exceeds Market Returns: Some Facts to Consider

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In the latest market close, Datadog (DDOG - Free Report) reached $109.52, with a +1.29% movement compared to the previous day. This change outpaced the S&P 500's 1.07% gain on the day. Elsewhere, the Dow saw an upswing of 0.31%, while the tech-heavy Nasdaq appreciated by 2.17%.

Shares of the data analytics and cloud monitoring company have depreciated by 5.46% over the course of the past month, underperforming the Computer and Technology sector's loss of 0.16% and the S&P 500's gain of 2.92%.

Investors will be eagerly watching for the performance of Datadog in its upcoming earnings disclosure. The company is expected to report EPS of $0.39, down 13.33% from the prior-year quarter. Alongside, our most recent consensus estimate is anticipating revenue of $662.55 million, indicating a 21% upward movement from the same quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.63 per share and revenue of $2.63 billion, indicating changes of +23.48% and +23.4%, respectively, compared to the previous year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Datadog. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.38% higher within the past month. At present, Datadog boasts a Zacks Rank of #2 (Buy).

In the context of valuation, Datadog is at present trading with a Forward P/E ratio of 66.48. This denotes a premium relative to the industry's average Forward P/E of 29.52.

Also, we should mention that DDOG has a PEG ratio of 6.95. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Internet - Software industry had an average PEG ratio of 1.99 as trading concluded yesterday.

The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 88, finds itself in the top 35% echelons of all 250+ industries.

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

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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