Shares of software solutions company Splunk (SPLK) have generated a return of 30% in the last 12 months. The stock easily outperformed broader markets last year and gained over 19%. Since the start of 2019, it’s up 28.5%.
Splunk shares have generated returns of 168% in the last three years and 120% in the last five years. These returns have been driven by the company’s robust revenue and earnings growth.
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Splunk’s earnings have risen at a CAGR (compound annual growth rate) of 86% in the last five years. While the company’s sales rose from $303 million in 2014 to $1.27 billion in 2019, its sales are expected to reach $3.36 billion by 2022.
Splunk stock is currently trading 6% below its 52-week high of $143.7 and 61% above its 52-week low of $143.70. With a relative strength index score of 62, Splunk is trading close to overbought territory.
Are Splunk shares overvalued?
Splunk is still posting a generally accepted accounting principles loss and is expected to do so until 2022.
Analysts expect the company’s sales to rise 23% in 2020 and 22% in 2021. Its EPS are expected to rise 26% in 2020 and 34% in 2022. Its EPS are expected to rise at a CAGR of 33% over the next five years. Will its revenue growth be enough to drive its stock higher?
Of the 43 analysts covering Splunk, 33 have given it “buy” recommendations, ten have given it “holds,” and none have given it “sells.” The average 12-month target price for Splunk is $152, which indicates a potential upside of 13% from its current level.