Yahoo Finance WalkMe Ltd. (WKME) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of WalkMe (WKME)? Shares have been on the move with the stock up 70.1% over the past month. The stock hit a new 52-week high of $13.81 in the previous session. WalkMe has gained 29.2% since the start of the year compared to the 19.8% move for the Zacks Computer and Technology sector and the 12.1% return for the Zacks Internet - Software industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 22, 2024, WalkMe reported EPS of $0.07 versus consensus estimate of $0.02.
For the current fiscal year, WalkMe is expected to post earnings of $0.18 per share on $281.29 million in revenues. This represents a 350% change in EPS on a 5.37% change in revenues. For the next fiscal year, the company is expected to earn $0.22 per share on $310.13 million in revenues. This represents a year-over-year change of 22.22% and 10.25%, respectively.
Valuation Metrics
WalkMe may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
WalkMe has a Value Score of F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 76.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 28.9X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 21.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, WalkMe currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if WalkMe fits the bill. Thus, it seems as though WalkMe shares could have potential in the weeks and months to come.
How Does WKME Stack Up to the Competition?
Shares of WKME have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Synchronoss Technologies, Inc. (SNCR). SNCR has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Synchronoss Technologies, Inc. beat our consensus estimate by 188%, and for the current fiscal year, SNCR is expected to post earnings of $0.56 per share on revenue of $172.84 million.
Shares of Synchronoss Technologies, Inc. have gained 2.6% over the past month, and currently trade at a forward P/E of 16.48X and a P/CF of 4.59X.
The Internet - Software industry is in the top 24% of all the industries we have in our universe, so it looks like there are some nice tailwinds for WKME and SNCR, even beyond their own solid fundamental situation.
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WalkMe Ltd. (WKME) : Free Stock Analysis Report
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