Please ensure Javascript is enabled for purposes of website accessibility

Why Pure Storage Stock Soared 14.5% Today

By Rich Smith – Aug 26, 2021 at 1:54PM

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

Pure Storage beat earnings yesterday, sort of.

What happened

The stock of Pure Storage (PSTG -2.12%), a provider of computer data storage hardware, was up 14.5% at 12:12 p.m. EDT on Thursday, even though the company reported only the very slimmest of earnings beats for its fiscal second quarter of 2022 last night.

Analysts had forecast that Pure Storage would earn $0.05 per share, pro forma, while in fact the company earned $0.06. On the revenue front, however, Pure Storage blew away the expectations, recording $496.8 million where Wall Street had foreseen only $469.5 million.  

Simple green arrow going up

Image source: Getty Images.

So what

Indeed, second-quarter 2022 sales rocketed 23% year over year, and subscription revenue for its online storage solutions jumped 31%.

Still, despite exceeding analyst expectations, I have to say that Pure Storage earnings seemed like a bit of a disappointment. According to CEO Charles Giancarlo, the company recorded its highest second-quarter operating profit in its history, a fact he said made it "clear that our long-term strategy ... is working."  

It might have been more accurate to say, however, that Pure Storage only lost less money in the second quarter than it had in prior quarters. The company recorded a $33.9 million operating loss and a 6.8% negative operating margin, and on the bottom line suffered a net loss of $45.3 million -- $0.16 per share.

Now what

Nevertheless, management is entitled to spin its results however it likes, as long as the numbers are accurate. Pure Storage says third-quarter sales are expected to be $530 million, and full-year sales should be $2.04 billion. If it hits those targets, it should continue beating analyst expectations all year long.

Whether it can do that and also earn an honest-to-goodness profit remains to be seen.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Pure Storage Stock Quote
Pure Storage
$29.61 (-2.12%) $0.64

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

Related Articles

Premium Investing Services

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