Is Snowflake Inventory a Purchase on Blockbuster Q2 Outcomes?

Snowflake (SNOW) registered stable top-line development in its final reported quarter, which propelled the inventory. Nevertheless, its backside line continues to be within the crimson. Additionally, contemplating its weak revenue margins, will or not it’s clever to put money into the inventory now? Learn on….



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Snowflake Inc. (SNOW) gives a cloud-based information platform in america and internationally. The corporate’s platform presents Information Cloud. Its medium is utilized by varied organizations of sizes in a spread of industries.

SNOW shares soared following the corporate’s second-quarter outcomes launch, which beat the highest line. SNOW’s income got here in at $497.25 million, up 82.7% year-over-year, topping the analysts’ expectation of $467 million.

“It is a category-leading firm that is rising far sooner than virtually anything in software program and doing so properly profitably with enhancing money margins,” analysts from Canaccord Genuity stated.

Nevertheless, the corporate’s backside line is within the crimson. Its web loss got here in at $222.81 million, up 17.4% year-over-year, whereas its web loss per share got here in at $0.70, up 9.4% year-over-year.

Though the inventory has gained 24.4% over the previous month, it’s down 45% year-to-date, closing the final buying and selling session at $186.43. It has misplaced 37.4% over the previous 12 months.

Here’s what might form SNOW’s efficiency within the close to time period:

Latest Developments

On June 14, 2022, SNOW launched its Snowpark for Python. It goals to make Python’s wealthy ecosystem of open-source packages and libraries accessible to all information scientists, information engineers, and utility builders.

Additionally, the corporate launched its Native Software Framework, which guarantees to empower builders to construct, monetize, and deploy functions within the Information Cloud. Furthermore, SNOW customers can securely function these functions instantly of their SNOW accounts, lowering the necessity for information elimination and, thus, enhancing buyer expertise.

Stretched Valuations

By way of its ahead EV/S, SNOW’s 28.51x is 934.2% larger than the {industry} common of two.76x. Its ahead P/S of 30.86x is 1,016.8% larger than the {industry} common of two.76x. Moreover, its ahead EV/EBITDA of 619.18x and ahead EV/EBIT of 1,412.79x are considerably larger than the {industry} averages of 12.78x and 15.99x, respectively.

Poor Revenue Margins

SNOW’s trailing-12-month damaging EBIT and EBITDA margins of 42.96% and 40.67% are decrease than the {industry} averages of seven.42% and 13.05%, respectively. Moreover, its trailing-12-month web earnings margin of damaging 41.25% is decrease than the {industry} common of 4.25%.

Furthermore, SNOW’s trailing-12-month ROCE, ROTC, and ROTA of damaging 13.00%, 8.12%, and 9.56%, in contrast with the {industry} averages of seven.28%, 3.98%, and a couple of.74%, respectively.

POWR Rankings Replicate Bleak Prospects

SNOW has an general ranking of D, equating to Promote in our proprietary POWR Rankings system. The POWR Rankings are calculated by contemplating 118 various factors, with every issue weighted to an optimum diploma.

SNOW has a D grade for Worth and High quality, in step with its higher-than-industry valuation multiples and lower-than-industry revenue margins, respectively.

As well as, it has a D grade for Stability, in sync with its 24-month beta of 1.63.

Within the 82-stock Know-how – Providers {industry}, SNOW is ranked #73. The {industry} is rated D.

Click on right here for the extra POWR Rankings for SNOW (Progress, Momentum, and Sentiment).

View all the highest shares within the Know-how – Providers {industry} right here.

Backside Line

SNOW’s newest quarterly outcomes have introduced stable top-line development. Nevertheless, its bleak backside line is regarding. Furthermore, analysts count on its EPS to say no 58.3% year-over-year to $0.05 for the quarter that ended January 2023. Subsequently, I believe overvalued inventory, SNOW, is likely to be finest prevented now.

How Does Snowflake Inc. (SNOW) Stack Up In opposition to its Friends?

Whereas SNOW has an general POWR Score of D, one may take into account its {industry} friends, Celestica Inc. (CLS), Issuer Direct Company (ISDR), and NetScout Techniques, Inc. (NTCT), which have an general A (Sturdy Purchase) ranking, and Field, Inc. (BOX), which has an general B (Purchase) ranking.


SNOW shares rose $2.97 (+1.59%) in premarket buying and selling Tuesday. 12 months-to-date, SNOW has declined -44.97%, versus a -14.60% rise within the benchmark S&P 500 index throughout the identical interval.


In regards to the Writer: Riddhima Chakraborty

Riddhima is a monetary journalist with a ardour for analyzing monetary devices. With a grasp’s diploma in economics, she helps buyers make knowledgeable funding selections by her insightful commentaries.

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