Please ensure Javascript is enabled for purposes of website accessibility

Why Elastic Stock Gained 12.9% in August

By Keith Noonan - Updated Sep 7, 2020 at 12:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The enterprise search company has rallied roughly 56% in 2020's trading.

What happened

Shares of Elastic (ESTC -5.61%) climbed 12.8% in August, according to data from S&P Global Market Intelligence. The stock gained ground thanks to broader market momentum, new feature and service announcements, and quarterly results that topped the market's expectations. 

^SPX Chart

^SPX data by YCharts.

Elastic announced new features including malware and threat-identification protections and a version of its enterprise search services available under its free distribution tier. These new features, combined with strong first-quarter earnings results and a rally for tech stocks, helped the stock post double-digit gains last month. 

A magnifying glass.

Image source: Getty Images.

So what

Elastic published first-quarter results on Aug. 26, delivering sales and earnings that topped Wall Street's targets. The company posted adjusted earnings per share of $0.06 on revenue of $128.87 million, while the average analyst estimate had called for a loss of $0.18 per share on sales of $120.94 million. Sales were up 43.7% year over year in the period, and software-as-a-service (SaaS) revenue climbed 86% to reach $32.6 million.

Now what

Elastic stock has given up some of last month's gains in September's trading. The company's share price has slipped roughly 9% in the month so far amid a sell-off for the broader market. 

^SPX Chart

^SPX data by YCharts.

Elastic is guiding for second-quarter revenue to come in between $129 million and $131 million, and it expects an adjusted loss per share between $0.20 and $0.22 for the period. For the full year, the company is targeting sales between $544 million and $550 million and an adjusted per-share loss between $0.69 and $0.83.

The company has a market capitalization of roughly $8.6 billion and is valued at 15.75 times this year's expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Elastic N V. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Elastic N.V. Stock Quote
Elastic N.V.
ESTC
$83.27 (-5.61%) $-4.95

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.