CrowdStrike (CRWD) Potential Upside If Guidance Positive, Earnings Beat Estimates

Market analysts is expecting a year-over-year increase in both the top and bottom lines, with earnings per share of $0.82 on revenues of $839.96 million. CrowdStrike is expected to post strong fourth-quarter results, benefiting from strong demand for its cybersecurity amidst an increase in online threats.

I will be expecting the CrowdStrike earnings to focus on adjacent product growth, endpoint share gains, competition, pricing, Charlotte AI/Falcon for IT, and Federal demand. The 'Falcon' EPP solution should bring CrowdStrike some monetary benefit as one of the main beneficiaries of the forthcoming revision to the National Cyber Incident Response Plan.

Technical is showing a Top Pullback. This happen when the stock is in an uptrend but the current stock price pulls back below the 20 day moving average.

As seen in below, we can see that CrowdStrike was in an uptrend, but we saw a pull back below the 20 day MA.

From the MACD, we can see that it is now trading below the MACD signal line, which would mean that there might be a possible downside coming. This would depends on how CrowdStrike guidance turn out.

If the guidance does not indicate much pessimistic 2025 outlook, then I believe CrowdStrike might still be able to get out of this pull back.

CRWD last reported earnings on 28 Nov 2023 after the market close (AMC). CRWD shares gained +10.4% the day following the earnings announcement to close at 234.44. Following its earnings release, 97 days ago, CRWD stock has drifted +33.9% higher.

From the time it announced earnings, CRWD traded in a range between 229.19 and 338.45. The last price (313.81) is closer to the higher end of range.

Despite a -0.06 EPS, CrowdStrike has managed to have a more than 10% gain after earnings release. The current Estimated implied straddle for upcoming earnings is 12.7%.

I am expected at least a 5% upside price effect if the guidance for 2025 turn out to be positive, given that CrowdStrike size make them easier to adapt to market purchasing decision swing.

If a company loses money, the PE Ratio becomes meaningless. Why am I interested in the PE ratio for CrowdStrike? Because the PE Ratio can be viewed as the number of years it takes for the company to earn back the price we pay for the stock.

If CrowdStrike continue to grow its earnings, with a lower P/E stocks are more attractive than higher P/E stocks, currently we can see that CrowdStrike with Palo Alto and Fortinet are almost on the same scale, so in order for us to determine which stock is more attractive.

So long as the PE Ratio is positive and for stocks with the same PE Ratio, the one with faster growth business is more attractive. Though CrowdStrike currently is at loss, but with the latest earnings, if they went into positive.

The options market overestimated CRWD stocks earnings move 67% of the time in the last 12 quarters. The predicted move after earnings announcement was ±8.9% on average vs an average of the actual earnings moves of 6.8% (in absolute terms).

Option valuation is overvalued, this suggest that there might be price volatility but if we learn from similar sector stock, the main focus would be on the guidance if the earnings beat estimates.

Based on what I have gathered, CrowdStrike looks to be in a better position that its peer. The main reason could be due to its size, and the room for more growth ahead is there. CrowdStrike industry-leading 'Falcon' EPP solution, this is something we should look out for.

I would be interested to see what is the revenue that this bring in, and how it will help CrowdStrike to grow its customer base in the future.

Appreciate if you could share your thoughts in the comment section whether you think CrowdStrike would be providing a better guidance if their results beat estimates?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.