fbpx

My First Look at CyberArk Software

Last year’s Sony hack sent many companies scurrying for more advanced cybersecurity, and sent many cyber stocks soaring as business came flowing in.

CyberArk Software (CYBR) has been a prime beneficiary of the extra business. CyberArk focuses on the administrative accounts — the corporation’s employee accounts with access to important information — which is where Sony got hit hard. CyberArk makes a digital vault for these important accounts so hackers can’t get in.

CYBR is a new company that I’ve been watching for a while. Today we did the spreadsheet on the stock and here are the charts, with a little background on the stock’s movement.

One Year Chart

CYBR_2015_Q2I noticed CYBR in February, a day before the company was set to report 2014 Q4 earnings. In the qtr prior, the company crushed the 1 cent estimate and made a whopping 20 cents. I felt the company could do this once again, but if it didn’t it could crash and burn. Back in December 2014, CYBR was only expected to make $0.06 in 2015. Even after it whipped Q4 estimates management still didn’t guide analysts higher. So it would have been a gamble for me to get clients in, and I passed.

The following day CYBR beat the 5 cent estimate with a profit of 21 cents. The stock gapped up and soared, jumping from around $40 and eventually topping $70. A quarter later the company made $0.16, beating the $0.06 estimate, and that’s where we stand today.

Fair Value

CYBR_2015_Q2_FVThe trouble with CYBR is we don’t know how much the company can make, so its difficult to get a Fair Value on the stock. In this analysis I put a 75 P/E on estimates of $0.43, but this assumes profits slip to 6 cents next qtr, 8 cents the next, and 13 cents in Q4. In all likelihood CYBR will do better than that. For 2015 the company says revenue should climb 25% but analysts have 36% growth estimated.

If we guess at what CYBR can make, maybe $0.80 is reasonable this year. That would make the current P/E around 80. This stock is high.

Sharek’s Take

At this point CyberArk management is underpromising then overdelivering. That’s good for the stock price but bad for us because if CYBR stops beating the street by a wide margin the stock could get hit. Big time. Also, cybersecurity stocks are all the rage right now and I feel they have gone too far too fast — which are exactly the types of stocks that correct harshly in a declining market. For now I’ll keep CYBR on the radar, and if the stock corrects I’ll look to get in at lower levels.

View the Earnings Table here.
View the Profit History here.
View the Ten Year Chart here.

Leave a Comment

Your email address will not be published. Required fields are marked *

Not a member? Sign up here for $25 a month.