Shares of Cloudflare (NET, Financial) surged 4.62% today, closing at $81.70, as markets responded positively to the Fed's rate cut, which reignited interest in risk assets.
Investors had anticipated a rate reduction from the US central bank, but there was uncertainty about whether the cut would be 25 basis points or 50 basis points. The final decision appears to have boosted investor confidence and interest in stocks like Cloudflare.
Cloudflare Inc (NET, Financial) is trading at $81.70, reflecting a market capitalization of $27.92 billion. Despite having an elevated price-to-book ratio of 31.67 and facing some warnings such as faster asset growth compared to revenue and insider selling, there are positives. The company's Altman Z-score of 8.47 indicates strong financial health, and its Beneish M-Score of -2.75 suggests it is unlikely to be a manipulator. Additionally, Cloudflare's operating margin is expanding, which is generally seen as a good sign.
According to the GF Value, Cloudflare is modestly undervalued with a GF Value of $99.41. This suggests that the stock may have further room for growth, making it an attractive option for investors looking for solid technology stocks. Notably, Cloudflare's revenue growth rates are impressive—44.4% over the last three years and 31.1% over the past year, placing it in a favorable growth position.
However, it's important to note the company has no dividend history and its profitability metrics like ROA and ROE are currently negative, sitting at -3.75% and -13.48%, respectively. This can be a concern for some investors looking for stable income and strong profitability. However, for those focused on growth and financial health, Cloudflare appears to be a compelling investment.
With a next earnings date estimated for November 1, 2024, investors will be keenly watching how the company's performance continues to evolve.
