As of late one software company has underperformed the sector and market. $WORK otherwise known as Slack Technologies has had a rough go of it, but is this an opportunity? Here is the breakdown on $WORK.
Current Price: $29.45
52/Wk High: $40.07
52/Wk Low: $15.10
Read below for the breakdown! 🚀
$WORK is a major software company that produces team communication software. The software has vast potential and can be used for simple notifications or advanced workflows for major organizations.
Not only that but Slack’s central software is perfect for the current environment. Due to COVID-19, many are forced to work at home, and even while cases are slimming many companies are pushing to permanently have a work from home workday.
This trend falls right into Slack’s hands. Their software allows co-workers to communicate from home, and work through their day as if they were in the office. With trends making this a likely pattern in the future, Slack is destined to grow and sustain customers.
Although everything seems great from that standpoint, the stock has been hit hard of late due to what seems to be earnings issues and investor fears over profitability.
On the other hand, according to the Motley Fool analysts believe that growth will exceed 38% on the top end this year.
Furthermore, $WORK has had consistent revenue gains since Q1 of 2019 and a slow down in growth does not seem to be in sight.
Digging into the numbers from the last quarterly report $WORK reported a Q1 2021 beat. Earnings per share came in at $-0.02 versus the expected $-0.06 consensus. Not only that but revenue came in huge at $201.7 million representing a whopping 50% YOY growth.
The first quarter of the year was excellent and the company added 12,000 new paid customers and added another 90,000 customers on subscription models both free and paid.
Cash also came in fine. Slack seems to be operating at full steam ahead. Free cash flow came in at $3.7 million which represents 2% of total revenue.
$WORK now has over 122,000 paid customers (28% gain YOY) and a whopping 750,000 organizations on either a free or paid subscription plan.
On the downside, $WORK did report a far bigger operating loss than expected of $76.2 million but that is expected to get substantially better throughout the year.
The forecast looking outbound also looks terrific. For Q2 2021 fiscal year $WORK expects revenue of $206 million to $209 million (Expecting 42% to 44% YOY gain).
Slack also expects EPS to come in at $-0.03 to $-0.04. Unfortunately, while the company is on track for profitability they still expect a loss in Q2 somewhere between $22 million and $18 million.
Analysts are also bullish on Slack. Currently, the mean price target is $34.00/share representing a whopping 15.69% upside. Secondly, the high price target is $45.00/share and low is $20.00/share.
Big money is bullish on the stock as well. Currently, 72.91% of common stock is owned by institutional investors. Top holders of the stock include Morgan Stanley, Price T Rowe Associates, and Wellington Management Group.
Overall I like Slack and the stock. I think at its current price point it is somewhat undervalued and is ready for some buying. I expect with a boost from COVID-19 that Q2 will be just as good if not better than Q1 and that should push the stock to new highs.
EAT - SLEEP - PROFIT 💰
Disclaimer: This is not direct financial advice, simply opinion based on independent research.