GitLab Inc. (GTLB) delivered a strong performance in the recent quarter, exceeding both earnings and revenue expectations. The company reported earnings of $0.15 per share, significantly surpassing the Zacks Consensus Estimate of $0.10 per share. This represents a 50% earnings surprise compared to the previous year’s earnings of $0.01 per share. Revenue for the quarter reached $182.58 million, topping the Zacks Consensus Estimate by 3.42% and surpassing the previous year’s revenue of $139.58 million.
Despite this positive performance, the future trajectory of GitLab’s stock remains uncertain. While the company has consistently exceeded earnings estimates in recent quarters, its stock has underperformed the market, declining by approximately 24.7% since the beginning of the year. This contrasts with the S&P 500’s gain of 18.4% during the same period.
To gauge the future prospects of the stock, investors often rely on the company’s earnings outlook. This includes analyzing current earnings expectations for upcoming quarters and how those expectations have changed recently. Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions. The Zacks Rank, a widely used rating tool, harnesses the power of earnings estimate revisions to provide insights into a company’s potential performance.
Ahead of the recent earnings release, the estimate revisions trend for GitLab was mixed. While this trend could change following the release, the current status translates into a Zacks Rank #3 (Hold) for the stock. This suggests that GitLab’s shares are expected to perform in line with the overall market in the near future.
Investors will be closely watching how estimates for the coming quarters and the current fiscal year evolve in the days ahead. The current consensus EPS estimate stands at $0.10 on $185.74 million in revenue for the upcoming quarter and $0.36 on $735.27 million in revenue for the current fiscal year.
It is crucial to consider that the overall industry outlook can significantly impact the performance of a stock. The Internet – Software industry, to which GitLab belongs, currently ranks within the top 37% of over 250 Zacks industries. Research shows that the top 50% of Zacks-ranked industries tend to outperform the bottom 50% by a factor of more than 2 to 1.
Smartsheet (SMAR), another company in the same industry, is expected to report its results for the quarter ended July 2024 on September 5. This cloud-based work-management platform provider is projected to post quarterly earnings of $0.29 per share, representing a year-over-year increase of 81.3%. The consensus EPS estimate for the quarter has been revised upward by 2.1% over the past 30 days. Smartsheet’s revenues are anticipated to reach $274.06 million, a 16.3% increase from the same period last year.
