Daily stocks in the news
Cybersecurity company CrowdStrike (CRWD) faced a downturn despite reporting positive results, as slowing growth and a high valuation impacted the stock. CRWD's Q1 earnings surpassed expectations, but concerns arose regarding its decelerating growth and inline revenue guidance for Q2. With a P/E ratio of approximately 67x, the stock faced a "sell the news" reaction. However, CRWD's land-and-expand strategy and a healthy dollar-based net retention rate indicate a thriving business. The company is optimistic about the demand for AI-powered software in the cybersecurity industry. While the earnings report was solid, the high expectations and rich valuation restrained the stock.
On the other hand, Dollar General (DG) followed the lead of Dollar Tree (DLTR) by missing on Q1 earnings per share (EPS) and reducing its guidance for sales, comps, cap-ex, and EPS for the full year. DG stated that the macroeconomic environment was more challenging than expected, particularly for its core customer base. Same-store comps remained positive at +1.6%, although lower than DLTR's +4.8%. Consumables had stronger comps, while non-consumable categories experienced a decline. DG attributed the weaker comps to factors such as lower tax refunds, reductions in SNAP benefits, unfavorable weather, and a shift in consumer spending away from discretionary goods. The company lowered its full-year comp guidance to +1-2%. The comp cadence showed strength in February, followed by pressure in April, but there have been positive comps in the first three weeks of Q2. DG anticipates a significant decline in EPS for Q2 and expects Q4 to be its strongest quarter. The weak results led to a new 52-week low for DG's stock, surprising investors who may have been prepared for a weak outcome following Dollar Tree's performance. The absence of share repurchases in Q1 and the revised guidance regarding repurchases in 2023 added to the stock's weakness.
Okta (OKTA) experienced a significant decline in stock despite delivering better-than-expected results in Q1. The bearish remarks from management about the macroeconomic environment overshadowed the positive performance. OKTA faced increased macro headwinds, particularly in new business with SMBs and enterprises, resulting in smaller average deal sizes. The company's current RPO and RPO backlog growth rates were the lowest in recent quarters. Despite adding new customers and improving profitability, OKTA's performance decelerated. The company raised its FY24 guidance but faced stiff competition from tech giants like Microsoft and Oracle.
NetApp (NTAP) reported better-than-expected results in a challenging business climate. While billings decreased and demand remained soft, the company saw improvement in margins and profits. NTAP's operating margin reached an all-time high, and EPS exceeded previous guidance. The company's disciplined operational management and cost control measures contributed to the positive results. NTAP expects to maintain margin gains in FY24 and anticipates growth in its all-flash array business. The announcement of a new share repurchase authorization also boosted investor sentiment. Despite business challenges, NTAP's earnings growth and strategic actions have led to a rally in its stock.