SentinelOne (S +1.19%) will announce its earnings for the second quarter of 2026 on August 27 after the bell. The report may generate some interest, as the company has won over customers with Singularity, its AI-native cybersecurity platform.
Moreover, investors have taken notice as the stock has risen by 42% since the beginning of the year. Amid the rising interest in the stock, should investors buy before the earnings release? Let's take a closer look.
Image source: The Motley Fool.
The state of SentinelOne
At first glance, SentinelOne's AI-native platform may offer some advantages. Thanks to that approach, it offers on-device AI models like its on-agent autonomous AI, giving it machine learning capabilities directly on the agent. Moreover, its Purple AI generative AI assistant works across security operations, and its 1-click remediation and rollback can return files to a pre-attack state when necessary.
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Key Data Points
However, investors have to remember the competitive nature of the cybersecurity industry. Unfortunately, the AI-native approach has not necessarily won over customers, and established cybersecurity companies like Palo Alto Networks, Fortinet, Microsoft, and CrowdStrike have also built platforms to address many of the same challenges.
Still, even as the industry pivots to more AI-oriented tools, the above companies have held higher market shares and built competitive advantages of their own. Consequently, many cybersecurity stocks have risen faster than SentinelOne this year.
Furthermore, the company's financials offer a mixed picture. Revenue grew by 21% in the first quarter of its fiscal 2027 (ended April 30), and the company forecasts a 20% increase in both Q2 and for the entire year.
Unfortunately, SentinelOne has only beaten revenue estimates once in the last four quarters. It has also consistently posted net losses, and neither the company nor the analyst forecasts point to profitability in the foreseeable future. This stands in contrast to companies like Palo Alto and CrowdStrike, which typically report a profit.
Nonetheless, one area where SentinelOne has stood out is valuation. The aforementioned losses mean it does not have a P/E ratio, but it trades at a price-to-sales (P/S) ratio of 7. This is well below its competitors and could become an incentive for some investors to take a chance on SentinelOne stock.
S PS Ratio data by YCharts
Should I buy SentinelOne stock before earnings?
Considering SentinelOne's history and competitive position, investors have no obvious reason to buy the stock before the August 27 report.
The low valuation and its AI-native platform may give some investors a reason to buy a speculative position. However, it is probably premature to call SentinelOne the next CrowdStrike. It operates in a competitive industry, and some of its peers continue to outperform it in market share and stock price appreciation.
Additionally, the stock's ongoing losses are a likely reason for the lower P/S ratio, which may make its discounted valuation less meaningful.
With its AI-native platform, SentinelOne remains well-positioned to capitalize on the growing need for cybersecurity. Unfortunately for its stock bulls, it does not appear to stand out enough for investors to buy it immediately, if at all.
