Anaplan (NYSE:PLAN) has been absolutely clobbered since its latest earnings update. Between the lack of a bigger earnings beat and raise to the company's revenue guidance and the coronavirus omicron variant, share prices have plummeted 36% in the last month and are down 41% in 2021 with just a month to go until the new year.  

Anaplan is doing just fine, though, and by one metric, shares are now as cheap as they were in March 2020 before we knew the cloud-based business-planning software company could continue growing in spite of pandemic disruption. At these levels, this stock is a great buy to kick-off 2022.

Three people in an office looking at a computer.

Image source: Getty Images.

A business rally now in question?

Anaplan said its third-quarter fiscal 2022 (the three-month period ended Oct. 31, 2021) revenue increased 35% year over year to $155 million. Of the total, $139 million was recurring subscription revenue, a 33% increase. As a point of reference, management had said to expect Q3 revenue to be as much as $146.5 million, so the actual result crushed expectations.

So why the glum mood among investors? It has to do with fourth-quarter guidance and the cadence of Anaplan's growth. Management said to expect Q4 revenue to be flat sequentially with Q3, guiding for a range of $154 million to $155 million. Though that guidance does imply a 26% increase over Q4 last year, it is a cool-off from the rallying results the company has been posting throughout the year.

Additionally, though management said it isn't done planning its longer-term outlook, the initial guidance for fiscal 2023 (the 12-month period that will end Jan. 31, 2023) is for revenue to be about $730 million, about 25% higher than expected current year sales. Perhaps the emergence of Omicron and ongoing pandemic effects will put this trajectory at risk since Anaplan reported on Nov. 23, the day before news broke of a new coronavirus strain.  

Nevertheless, Anaplan has remained a double-digit percentage growth business during the pandemic thus far. And the need for its resource planning software isn't going away with supply chains and other financial uncertainties remaining a top concern among the big businesses Anaplan is helping. This most recent sell-off in the stock looks overblown to me.  

Cheap for the long-term potential

Of course, many investors simply aren't going to be comfortable owning a stock like Anaplan. The company still isn't profitable (free cash flow was negative $17.2 million through the first nine months of the current fiscal year), though that's by design as it spends aggressively on marketing to promote growth. I'll provide my token quarterly remark here that the company has plenty of cash ($313 million at the end of October) and no debt, so the pace of this spending isn't really a concern right now.  

But for growth investors comfortable with the volatile nature of this stock, Anaplan is nearly as cheap as it's ever been. At less than 11 times trailing 12-month sales, this brings the valuation back to levels not seen since the early months of the pandemic -- even though the company continues to forecast expansion in excess of 20%. And based on initial guidance for next year, the stock trades for just over eight times fiscal 2023 sales.

That makes Anaplan a buy right now in my book to kick off the upcoming new year. Mind you, this is a small position worth less than 1% of my portfolio. Nevertheless, the long-term thesis for the company remains intact, so I'm comfortable adding at these levels after what looks like unfair punishment for this cloud computing software outfit.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.