Ahead Of Earnings, Consider These 3 Fast-Growing Tech Stocks
Investing.com | Jan 27, 2021 05:31AM ET
The US tech sector earnings season shifts into high gear in the coming days.
While most of the focus will be on the mega-cap names like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Google-parent Alphabet (NASDAQ:GOOG), (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), and Facebook (NASDAQ:FB), investors would be wise to turn their attention to other high-flying companies poised to provide strong long-term growth.
Here are three fast-growing tech sector stocks set to enjoy explosive earnings and revenue growth thanks to surging demand for their innovative products. Each is well worth considering ahead of their quarterly reports in the days ahead.
1. Pinterest /h2
- Reports Thursday, Feb. 4 After Markets Close
- EPS Growth Estimate: +175% YoY
- Revenue Growth Estimate: +61.1% YoY
Pinterest (NYSE:PINS) shares—which surged by around 250% in 2020—have picked up where they left off last year, climbing 5% so far in 2021.
The San Francisco, California-based social media company has benefited from increasing budget allocations from advertisers seeking to avoid the toxic and controversial content seen on other social media platforms, such as Facebook and Twitter (NYSE:TWTR).
PINS stock ended at $69.24 on Tuesday, pulling back from its all-time high of $76.88 reached on Jan. 13, giving the image-sharing social media network a market cap of around $45.6 billion.
Pinterest, which reported blockbuster third quarter results at the end of October, is scheduled to next report earnings on Thursday, Feb. 4 after the closing bell.
Consensus estimates call for earnings of $0.33 per share for the fourth quarter, improving from EPS of $0.12 a year earlier. Revenue is forecast to jump 61% year-over-year to $644.2 million, driven by strong advertising spending and high user engagement levels amid the holiday season.
Beyond the top- and bottom-line figures, investors will pay close attention to Pinterest’s update on its global monthly active users (MAUs) to see if it can maintain its torrid pace of growth. Global MAUs surged 37% year-over-year to 442 million in the last quarter.
Another key metric in focus will be Pinterest’s average revenue per user (ARPU). The social media company generated an ARPU of $3.85 in the US in Q3, while its non-US ARPU totaled $0.21, increasing 31% and 66% respectively when compared to the same quarter last year.
2. Fortinet /h2
- Reports Thursday, Feb. 4 After Markets Close
- EPS Growth Estimate: +26.3% YoY
- Revenue Growth Estimate: +17.6% YoY
Cybersecurity specialist Fortinet (NASDAQ:FTNT) has been one of the top performers in the fast-growing cybersecurity sector in recent months, with shares jumping around 40% since the end of October.
The cloud-based information security firm has benefitted from increasing demand for its products and services as the COVID-19 pandemic sped up enterprise digitization trends.
FTNT stock closed at $149.65 yesterday, not far from a record high of $155.31 touched on Jan. 12, earnings the Sunnyvale, California-based company a valuation of $24.4 billion.
Fortinet, which beat expectations for its third quarter earnings and revenue in late October, next reports financial results after the US market closes on Thursday, Feb.4.
It has either beaten or matched Wall Street estimates for 11 consecutive quarters, dating back to Q1 2018.
Consensus estimates call for earnings of $0.96 per share, which would indicate a year-over-year EPS growth rate of 26%. Revenue is expected to increase roughly 18% from the same period a year earlier to $722.5 million, as the shift to the work-from-home amid the COVID-19 pandemic created soaring demand for its security solutions.
Perhaps of greater interest is the growth rates in Fortinet’s services segment, which includes offerings such as FortiGuard security subscriptions and FortiCare technical support. This key business saw year-over-year sales growth of 22% in Q3.
3. Snap/h2
- Reports Thursday, Feb. 4 After Markets Close
- EPS Growth Estimate: +58.8% YoY
- Revenue Growth Estimate: +51% YoY
Snap (NYSE:SNAP), the parent company of social media messaging app Snapchat, was another big winner of 2020, with shares rallying 215% as investors turned increasingly bullish on the social media company.
The Santa Monica, California-based tech firm, which has significantly outperformed its social media rivals such as Facebook and Twitter over the last 12 months, has enjoyed a surge in user growth as well as robust demand from advertisers.
SNAP stock, which has gained about 7% so far in 2021, settled at $53.29 last night, within sight of its all-time high of $57.39 reached on Jan. 21. At current levels, it has a market cap of about $81.2 billion.
Snap, whose earnings and revenue smashed expectations in the last quarter, next reports financial results after the market closes on Thursday, Feb. 4.
Consensus calls for a loss of $0.07 per share for the fourth quarter, narrowing from a loss per share of $0.17 a year-ago. Revenue is forecast to surge 51% from the same quarter a year earlier to $846.9 million, thanks to accelerated ad spending made on its platform.
In addition, details regarding Snap’s daily active users (DAUs) will be in focus. The multimedia messaging app has recently enjoyed a resurgence in user growth, with DAUs climbing 18% from the year-ago period to reach an all-time high of 249 million in the third quarter.
Investors will also pay close attention to growth in Snap's overall average revenue per user, which rose 28% to an all-time high of $2.73 in Q3, indicating that the social media company has further improved its ability to monetize its user base.
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