Shares of leading supply chain cloud services provider SPS Commerce (SPSC 20.84%) are down 24% as of noon ET on Friday, according to data provided by S&P Global Market Intelligence.
SPS Commerce reported third-quarter earnings on Thursday and saw sales and adjusted earnings per share rise by 16% and 23%, respectively.
While these results were perfectly fine (in a business operations sense), the market was disappointed that they didn't meet Wall Street's revenue estimates for the quarter.
Making matters worse, management estimated that organic sales in 2026 would rise by only 7% to 8% -- far from the 18% annualized revenue growth rate over the last five years.
Don't be spooked by SPS Commerce's quarter
While management's sales guidance is a bit disappointing, it is probably just conservative rather than a red flag. At the end of the day, SPS is a steadily growing stock that continues to be the No. 1 player in its cloud-based supply chain offerings niche for retailers, third-party logistics providers, and suppliers.
Speaking to the company's leadership advantage, CEO Chad Collins explained, "We are the industry's most broadly adopted retail cloud services platform and the world's leading retail network. We provide unmatched value in the data that powers AI-driven use cases, and a unique, network-led growth motion."
Image source: Getty Images.
Just how good a growth stock is SPS?
Q3 was the company's 99th consecutive quarter of top-line growth, and the stock has doubled the total returns of the S&P 500 in its time as a public company.
Now that it's down 63% from its all-time high and trading at 21 times free cash flow -- very near its all-time lows -- I'm happy to buy shares of the promising growth stock as the market worries.
