Whilst not wanting to entertain the idea of trading, I am considering taking advantage of recent valuation shifts post earnings reports to potentially trim and re-allocate where possible with a few tweaks as Saul might to ride multiple growth horses.
I’m conscious that we have witnessed some massive post earnings share price run-ups and valuation hikes in:
TTD (P/S 10.33 & EV/S 5.45) with YoY Rev growth of 54%
Alteryx (P/S 20.65 & EV/S 10.53) with YoY Rev growth of 54%
Fortinet (P/S 7.72 & EV/S 5.76) with YoY Rev growth of 21% (slightly lower valuation but lower growth)
Grub Hub (P/S 14.02 & EV/S 11.12)with YoY Rev growth of 51%
PayCom (P/S 15.51 & EV/S 11.61) with YoY Rev growth of 31%
Hortonworks (P/S 5.4 & EV/S 4.7)with YoY Rev growth of 39% (looks under valued to its peers)
Twilio (P/S 15.4 & EV/S 10.2)with YoY Rev growth of 47%
Square (P/S 10.5 & EV/S 9.0)with YoY Rev growth of 60%
Of note though were 2 companies that reported well but were’t well received:
Talend (P/S 10.3 & EV/S 7.89) with YoY Rev growth of 42%
Shopify (P/S 18.25 & EV/S 16.27)with YoY Rev growth of 61%
Obviously this doesn’t take account of profitability or levels of recurring revenues or billings growth etc but it makes me think that strong growth players that beat and raise are being rewarded whilst some players have a much higher valuation/growth profile than others and could be trimmed and reallocated.
Now as for the reallocation targets - the companies still to report and with their track records of beat and raise as well as the season’s market reaction to earnings reports I’m looking at a few I hold that could potentially benefit especially considering a relative valuation/growth profile comparison…
Nutanix (P/S 8.53 & EV/S 7.37) with a most recent growth rate of 40%
Pure Storage (P/S 4.7 EV/S 3.5) with a most recent growth rate of 40%
Further out we still have Q2 reports from Pivotal & MungoDB which could also be interesting to top up in anticipation of earnings reports.
My question to folks on this board - would the recent rises and comparative valuations tempt you to trim in order to top up NTNX or PSTG which are both ~5-6% holdings each for me (or Pivotal or MungoDB even) and if so what would you be tempted to trim from the above (~2-4% holdings each for me) or any other current high flyer? (I unfortunately was not holding New Relic). Paycom, Alteryx and Shopify look the most stretched to me and Pure and Hortonworks followed by Nutanix look the best value at a glance.
Any thoughts?
Thanks
Ant
p.s. This makes me think we should try and create a database to track growth metrics of revenues, recurring revenues, billings, deferred and comparative valuations of P/E, P/S, EV/S. If we could come up with some kind of equivalent to PEG that would be really neat.