CRWD - Embedded Expectations Analysis - 2022 02 24
CrowdStrike Holdings, Inc. (CRWD) currently trades above historical averages relative to Uniform assets, with a 24.8x Uniform P/B (V/A').At these levels, markets are pricing in expectations for Uniform ROA to reach new peaks of 52%, accompanied by 25% Uniform asset growth.
However, analysts expect Uniform ROA to fade to 5% by 2023, accompanied by 57% Uniform asset growth.
If sustained going forward, these levels would suggest significant potential equity downside. That said, as an early-stage growth name, it is not uncommon to see expectations for a material expansion in profitability.
Moreover, the firm's most recent earnings call suggests management may have concerns about security breaches, partnerships, and growth.
CrowdStrike is a holding company. Through its subsidiaries, the company provides a cloud-delivered solution for next-generation endpoint protection that offers 10 cloud modules on its Falcon platform via a SaaS subscription-based model that spans multiple large security markets, including endpoint security, security and IT operations (including vulnerability management), and threat intelligence. The company conducts its business in the United States, as well as locations internationally, including in Australia, Germany, India, Romania, and the United Kingdom.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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