Cloudflare Inc (NET, Financial) has experienced a remarkable surge in its stock price, with a 13.47% gain over the past week and an impressive 39.84% gain over the past three months. The company's market capitalization now stands at $38.07 billion, with the current stock price at $113.37. According to GuruFocus's valuation metrics, Cloudflare is currently modestly undervalued with a GF Value of $126.83, a notable increase from the past GF Value of $146.39, which indicated the stock was significantly undervalued. This positive momentum reflects investor confidence in Cloudflare's growth trajectory and market position.
Introduction to Cloudflare Inc
Cloudflare Inc, a prominent player in the software industry, is headquartered in San Francisco, California. The company specializes in providing security and web performance services through its advanced distributed CDN and edge computing platform, known as Workers. This platform allows clients to deploy and execute code efficiently without the need for server maintenance. Cloudflare's innovative approach to content delivery and cybersecurity has positioned it as a key service provider in the digital landscape.
Assessing Cloudflare's Profitability
Despite Cloudflare's growth, its Profitability Rank is currently at 3 out of 10. The company's operating margin stands at -15.99%, which is better than 27.13% of companies in the industry. Its ROE is at -31.45%, ROA at -7.85%, and ROIC at -19.21%, each outperforming a significant portion of their industry peers. These figures suggest that while Cloudflare is not currently leading in profitability, it is performing better than many competitors in the software sector.
Cloudflare's Growth Trajectory
Cloudflare's Growth Rank is a robust 8 out of 10. The company has demonstrated a solid 3-Year Revenue Growth Rate per Share of 15.10% and an even more impressive 5-Year Revenue Growth Rate per Share of 25.30%. Looking ahead, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is projected at 31.00%. Cloudflare's 3-Year EPS without NRI Growth Rate is 6.40%, and despite a 5-Year EPS without NRI Growth Rate of -37.10%, the EPS Growth Rate (Future 3Y To 5Y Est) is expected to skyrocket to 71.92%. These growth rates are commendable when compared to industry peers, indicating that Cloudflare is on a strong upward trajectory.
Key Shareholders in Cloudflare
Cloudflare's shareholder base includes notable investment firms. Baillie Gifford (Trades, Portfolio) holds a significant stake with 30,938,677 shares, representing 9.21% of the company. Frank Sands (Trades, Portfolio) is another major shareholder with 11,007,391 shares, accounting for 3.28%. Additionally, Ron Baron (Trades, Portfolio) holds 939,529 shares, equating to a 0.28% share percentage. The involvement of these prominent investors underscores the confidence in Cloudflare's business model and future prospects.
Competitive Landscape
When compared to its competitors, Cloudflare stands out with its $38.07 billion market cap. VeriSign Inc (VRSN, Financial) has a market cap of $20.63 billion, Fleetcor Technologies Inc (FLT, Financial) at $19.45 billion, and Akamai Technologies Inc (AKAM, Financial) closely follows with a market cap of $19.26 billion. Cloudflare's higher market valuation suggests a stronger market position and investor confidence relative to these industry counterparts.
Conclusion
In summary, Cloudflare Inc's recent stock performance has been impressive, with significant gains over the past week and three months. The company's current valuation indicates that it is modestly undervalued, presenting a potential opportunity for investors. While Cloudflare's profitability metrics may not be leading the industry, its growth prospects are strong, with high expectations for revenue and EPS growth in the coming years. The presence of significant shareholders like Baillie Gifford (Trades, Portfolio), Frank Sands (Trades, Portfolio), and Ron Baron (Trades, Portfolio) may further bolster investor confidence. Compared to its competitors, Cloudflare's market cap dominance reflects its solid market position and the potential for continued growth and success in the software industry.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
