Is Snowflake a buy?

It’s time to breakdown a popular cloud technology name. Here is the breakdown on $SNOW, otherwise known as Snowflake.


Current Price: $269.65

52/Wk High: $429.00

52/Wk Low: $208.55


Market Cap: $82.1 Billion


Read below for the breakdown!


Snowflake ($SNOW) is a major cloud data platform provider in which offers customers the ability to collect data in a single source and create insights to improve business and build applications, as well as share data.


Furthermore, Snowflake operates a global cloud ecosystem in which thousands of companies and organizations can access data and develop new insights.


Taking a look at Snowflakes customers, the company works with some major names including Okta, Cisco, Sonos, Hubspot, Micron, Coupa, CapitalOne, Chime, Comcast, Forbes, Overstock, EA, and many more strong companies.


As for partnerships, Snowflake has created and maintained partnerships with companies such as Amazon, Microsoft, Google, and many more.


Digging into the numbers, Snowflake missed expectations for Q3 2021, reporting an EPS of $-0.28, just below the analyst’s consensus estimate of $-0.26.



On a positive note, Snowflake delivered solid revenues, reporting $148.5 million in product revenues, representing a 115% year-over-year improvement. Furthermore, total revenues totaled $159.6 million, representing a strong 119% increase in revenues on a year over year basis.



Remaining performance obligations also improved, totaling $927.9 million for Q3, representing a strong 240% increase on a year over year basis.



When it comes to customers, Snowflake reported a total of 3,554 customers and 65 customers with a trailing 12-month product revenues level greater than $1 million.




On the basis of gross profit, Snowflake reported a product gross profit of $96.7 million and a product gross profit margin of 65%.


Shifting back to the negatives, Snowflake continued to run an operating loss, reporting a 2021 Q3 operating loss of $169.5 million.


Overall, management was upbeat about the quarter.


“The period was marked by continued strong revenue growth coupled with improving unit economics, cash flow, and operating efficiencies,” CEO Frank Slootman said.


Snowflake also produced solid guidance, with the expectation that Q4 product revenues will total $162 million to $167 million in which represents 97% to 103% growth on a year over year basis.


As for the full year, Snowflake is expecting strong numbers, with management guiding for $538 million to $543 million in product revenues for FY 2021. On a year over year basis, FY 2021 product revenues are expected to improve by 113% to 115%.


Shifting into the balance sheet the numbers are solid.


Total Debt: None


Total Liabilities: $745 Million


Total Assets: $5.713 Billion


Cash & Short Term Inv: $4.754 Billion


On a valuation basis, Snowflake does trade at a premium.


Price to Sales: 155.90x


Price to Book: 9.06x


Given the numbers the analysts are bullish with a mean price target of $303.11/share, representing a 12.41% upside.


It is also important to note that the high price target is $350.00/share, representing a 29.80% upside, while the low price target is $264.00/share, representing a -2.10% downside.


The big money is very involved as well, with 149.71% of Snowflake being owned by institutions. Top holders include Altimeter Capital Management, ICONIQ Capital, and Morgan Stanley Investment Management.


On a technical basis, Snowflake has mainly been flat. Taking a look at the six-month charts the MACD has been relatively flat within a tight range around -0.7487.



The six-month charts are also indicating an RSI of 36.88 and CCI of -97.1611, both of which are on the low end.


In short, Snowflake is a solid company with growing revenues, plenty of market to grow into, and a strong list of customers.


EAT - SLEEP - PROFIT


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.