What Do You Need to Know About Snowflake (SNOW) Before Investing?

Snowflake logged a -0.9% change during today's evening session, and is now trading at a price of $185.97 per share.

Snowflake returned gains of 24.0% last year, with its stock price reaching a high of $193.94 and a low of $119.27. Over the same period, the stock outperformed the S&P 500 index by 10.0%. More recently, the company's 50-day average price was $156.96. Snowflake Inc. provides a cloud-based data platform for various organizations in the United States and internationally. Based in Bozeman, MT, the large-cap Technology company has 6,783 full time employees. Snowflake has not offered a dividend during the last year.

The Business Has Consistently Weak Margins:

2021 2022 2023
Revenue (MM) $592 $1,219 $2,066
Gross Margins -51% -21% -6%
Operating Margins -91% -56% -40%
Net Margins -91% -56% -39%
Net Income (MM) -$539 -$680 -$798
Net Interest Expense (MM) $8 $29 $74
Depreciation & Amort. (MM) $10 $21 $64
Free Cash Flow (MM) -$80 $94 $521
Capital Expenditures (MM) $35 $16 $25
Net Current Assets (MM) $3,151 $2,826 $2,193
Long Term Debt (MM) $110 $139 $261
LT Debt to Equity 0.02 0.03 0.05

Snowflake has healthy debt levels, growing revenues and decreasing reinvestment in the business, and generally positive cash flows. However, the firm suffers from slimmer gross margins than its peers and consistently poor operating margins with a positive growth rate. Finally, we note that Snowflake has positive expected EPS Growth.

Snowflake 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 $1.14, the company has a forward P/E ratio of 137.7. In comparison, the average P/E ratio for the Technology sector is 35.0. Furthermore, Snowflake is likely overvalued compared to the book value of its equity, since its P/B ratio of 12.42 is higher than the sector average of 7.92. Overall, Snowflake's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

Snowflake Has an Average Rating of Buy:

The 39 analysts following Snowflake have set target prices ranging from $120.0 to $600.0 per share, for an average of $213.69 with a buy rating. As of April 2023, the company is trading -26.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Snowflake has an average amount of shares sold short because 3.0% of the company's shares are sold short. Institutions own 67.0% of the company's shares, and the insider ownership rate stands at 9.45%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 6% stake in the company is worth $3,613,190,697.

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.