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Splunk Stock Continued Its Impressive Run Yesterday

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Aug. 29 2018, Published 8:25 a.m. ET

Stock up over 5%

Splunk (SPLK) stock rose 5.2% on August 28, 2018, to close at $127.43. This software and cloud solutions company has been on a roll since it released its quarterly results last week. Splunk stock has gained 18% in the last three trading days and is currently trading 104% above its 52-week low of $62.39 and marginally below its 52-week high of $127.6.

On August 24, Splunk announced its fiscal Q2 2019 results and reported revenue of $388.3 million, an impressive increase of 38.6% YoY (year-over-year). Non-GAAP (generally accepted accounting principles) EPS (earnings per share) were $0.08, which was 60% higher compared to analyst estimates of $0.05.

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Expanded customer base

Splunk expanded its customer base in fiscal Q2 as the company brought on board over 550 enterprise companies (compared to 440 in the first quarter) and expanded ongoing partnerships with firms including Southwestern Energy (SWN), the United States Department of Defense, Amazon (AMZN), and Automated Data Processing (ADP).

According to analysts, Splunk has been able to leverage opportunities driven by the digital transformation of companies. Splunk’s robust revenue growth is expected to continue as sales are estimated to rise 32.3% YoY to $1.68 billion in fiscal 2019 and 24.5% to $2.09 billion in fiscal 2020.

In comparison, EPS are expected to rise 77.4% in 2019, 40.9% in 2020, and 34.6% YoY over the next five years. Despite Splunk’s recent rally, it’s still trading 2.5% below the average analyst price target estimates of $130.78.

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