How Smart Investors Look at Cloudflare (NET).

Now trading at a price of $60.46, Cloudflare has moved 1.1% so far today.

Cloudflare returned losses of -9.0% last year, with its stock price reaching a high of $76.07 and a low of $37.37. Over the same period, the stock underperformed the S&P 500 index by -17.0%. As of April 2023, the company's 50-day average price was $65.55. CloudFlare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. Based in San Francisco, CA, the large-cap Technology company has 3,389 full time employees. Cloudflare has not offered a dividend during the last year.

The Business Is Unprofitable and Its Balance Sheet Is Highly Leveraged:

2020-02-10 2021-02-25 2022-03-01 2023-02-24
Revenue (k) $287,022 $431,059 $656,426 $975,241
Gross Margins 78.0% 77.0% 78.0% 76.0%
Operating Margins -38% -25% -19% -21%
Net Margins -37.0% -28.0% -40.0% -20.0%
Net Income (k) -$105,828 -$119,370 -$260,309 -$193,381
Net Interest Expense (k) $4,675 -$18,376 -$47,264 $9,893
Depreciation & Amort. (k) -$29,479 -$49,387 -$66,607 -$102,335
Earnings Per Share -$0.72 -$0.4 -$0.83 -$0.59
EPS Growth n/a 44.44% -107.5% 28.92%
Diluted Shares (k) 146,306 299,774 314,543 326,332
Free Cash Flow (k) $4,372 $39,246 $157,634 $267,201
Capital Expenditures -$43,289 -$56,375 -$92,986 -$143,606
Net Current Assets (k) $584,876 $566,243 $395,144 -$76,060
Long Term Debt (k) $10,506 $383,275 $1,146,877 $1,436,192
LT Debt to Equity 0.01 0.47 1.41 2.3

Cloudflare has a pattern of improving cash flows and an excellent current ratio. Additionally, the company's financial statements display wider gross margins than its peer group and positive EPS growth. However, the firm suffers from consistently negative margins with a positive growth rate and high levels of debt. Finally, we note that Cloudflare has weak revenue growth and a flat capital expenditure trend.

Cloudflare does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of $0.45, the company has a forward P/E ratio of 145.7. In comparison, the average P/E ratio for the Technology sector is 27.16. Furthermore, Cloudflare is likely overvalued compared to the book value of its equity, since its P/B ratio of 31.43 is higher than the sector average of 6.23.

Cloudflare Has an Average Rating of Buy:

The 24 analysts following Cloudflare have set target prices ranging from $43.0 to $90.0 per share, for an average of $70.42 with a buy rating. As of April 2023, the company is trading -6.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Cloudflare has an average amount of shares sold short because 6.6% of the company's shares are sold short. Institutions own 89.2% of the company's shares, and the insider ownership rate stands at 0.97%, suggesting a small amount of insider investors. The largest shareholder is Morgan Stanley, whose 11% stake in the company is worth $1,942,063,246.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.