Is CyberArk Software Ltd.’s (NASDAQ:CYBR) Future Growth Already Accounted For In Today’s Price?

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Looking at CyberArk Software Ltd.’s (NASDAQ:CYBR) fundamentals some investors are wondering if its last closing price of $127.12 represents a good value for money for this high growth stock. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

See our latest analysis for CyberArk Software

Should you get excited about CYBR’s future?

CyberArk Software is poised for significantly high earnings growth in the near future. Expectations from 21 analysts are extremely positive with earnings forecasted to rise significantly from today’s level of $1.485 to $2.576 over the next three years. This results in an annual growth rate of 29%, on average, which illustrates a highly optimistic outlook in the near term.

Can CYBR’s share price be justified by its earnings growth?

CyberArk Software is available at price-to-earnings ratio of 85.57x, showing us it is overvalued based on current earnings compared to the Software industry average of 51.7x , and overvalued compared to the US market average ratio of 17.73x .

NasdaqGS:CYBR Price Estimation Relative to Market, June 25th 2019
NasdaqGS:CYBR Price Estimation Relative to Market, June 25th 2019

We understand CYBR seems to be overvalued based on its current earnings, compared to its industry peers. However, since CyberArk Software is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 85.57x and expected year-on-year earnings growth of 29% give CyberArk Software a quite high PEG ratio of 2.98x. Based on this growth, CyberArk Software’s stock can be considered overvalued , based on its fundamentals.

What this means for you:

CYBR’s current overvaluation could signal a potential selling opportunity to reduce your exposure to the stock, or it you’re a potential investor, now may not be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:

  1. Financial Health: Are CYBR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Past Track Record: Has CYBR been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of CYBR’s historicals for more clarity.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.