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Why AppFolio Stock Jumped 22.3% in April

By Beth McKenna – May 7, 2019 at 8:18AM

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Shares of the software-as-a-service provider have gained more than 60% in 2019.

What happened

Shares of AppFolio (APPF 0.83%) gained 22.3% in April, according to data from S&P Global Market Intelligence. The S&P 500, including dividends, returned 4.1% last month.

AppFolio is a software-as-a-service (SaaS) provider that focuses on the real estate and legal markets.

Shares are up 60.5% in 2019 through Monday, May 6, versus the S&P 500's 17.7% return over this period. 

AppFolio app screen view of two real estate rental listings.

Image source: AppFolio.

So what

AppFolio didn't release any notable news in April, nor was it the specific subject of any such news. So, we can probably attribute the stock's rise last month to a continuation of the momentum that it's enjoyed for some time, as more investors discover the fast-growing company.

APPF Chart

Data by YCharts.

Moving beyond April, the company released material news this month. On May 2, it announced its first-quarter 2019 results. Revenue soared 35% year over year to $57.1 million, and net income came in at $3.7 million, or $0.11 per share, down from $4.3 million, or $0.12 per share, in the year-ago period. On the earnings call, CFO Ida Kane attributed the decline in profitability to "higher investments in growth initiatives that we believe will positively impact long-term shareholder value."

Shares fell 3.4% on May 3, which we can attribute to EPS of $0.11 missing Wall Street's consensus estimate of $0.18. Revenue came in slightly above expectations. 

Shares are down 2.1% so far in May, a negligible dip for a stock that's gained more than 60% this year.

APPF Chart

Data by YCharts.

Now what

AppFolio shares are very pricey, trading at 68 times projected forward EPS. But we'd expect that for the stock of a company that Wall Street forecasts to grow 2019 EPS nearly 79% year over year.

Growth investors comfortable with stocks that sport high valuations may want to put AppFolio on their watchlist.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AppFolio. The Motley Fool has a disclosure policy.

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