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Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.
Zacks Premium also includes the Zacks Style Scores.
What are the Zacks Style Scores?
Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value Score
For value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth Score
Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum Score
Momentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.
VGM Score
What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank
The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: CyberArk (CYBR)
Headquartered in Petah Tikva, Israel, CyberArk Software Ltd. was founded in 1999. Together with its subsidiaries, the company provides information technology security solutions. The company is a vital security partner to more than 5,400 global businesses, which include over 50% of the Fortune 500 and more than 35% of the Global 2000 companies.
CYBR is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.
Momentum investors should take note of this Computer and Technology stock. CYBR has a Momentum Style Score of A, and shares are up 9.7% over the past four weeks.
Three analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.15 to $2.44 per share. CYBR also boasts an average earnings surprise of 97.7%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, CYBR should be on investors' short list.
Zacks Investment Research
When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
Let's take a look at what these Wall Street heavyweights have to say about CyberArk (CYBR) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
CyberArk currently has an average brokerage recommendation (ABR) of 1.10, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 29 brokerage firms. An ABR of 1.10 approximates between Strong Buy and Buy.
Of the 29 recommendations that derive the current ABR, 27 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 93.1% and 3.5% of all recommendations.
Brokerage Recommendation Trends for CYBR
While the ABR calls for buying CyberArk, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near -term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
ABR Should Not Be Confused With Zacks Rank
In spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Should You Invest in CYBR?
Looking at the earnings estimate revisions for CyberArk, the Zacks Consensus Estimate for the current year has increased 10.4% over the past month to $2.44.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for CyberArk. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here
Therefore, the Buy-equivalent ABR for CyberArk may serve as a useful guide for investors.
Zacks Investment Research
NVIDIA Corporation NVDA is poised to deliver another stellar quarterly performance when it announces third-quarter fiscal 2025 results on Nov. 20. The company, a pivotal force in generative artificial intelligence (AI) and large language models, is expected to showcase robust revenue growth, driven by surging demand for its advanced chips from the datacenter market.
Click here to know how NVDA’s overall fiscal third-quarter results are likely to be.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Datacenter Segment: NVIDIA’s Growth Engine
The datacenter segment has been NVIDIA’s crown jewel, propelling its financial performance to unprecedented heights. In the second quarter of fiscal 2025, the segment posted a jaw-dropping 154% year-over-year growth, generating $26.27 billion in revenues — a 16% sequential increase. This growth underscores the market’s hunger for computational power, fueled by generative AI applications.
The momentum is expected to persist. Our model forecasts NVIDIA’s datacenter revenues to reach $28.48 billion in the third quarter, marking a remarkable 96% year-over-year increase and an 8% sequential rise. This surge reflects the company’s indispensable role in the AI ecosystem, as enterprises increasingly rely on its cutting-edge Hopper, Ampere and Blackwell architecture graphics processing units (GPUs) to drive innovation.
Generative AI: The Billion-Dollar Catalyst for NVIDIA
Generative AI, spearheaded by advancements like OpenAI’s ChatGPT, has reshaped industries by automating and enhancing content creation, including text, images, audio and synthetic data. This technological revolution is transforming workflows across marketing, customer service and healthcare.
Fortune Business Insights projects the global generative AI market to soar to $967.6 billion by 2032, growing at a compound annual growth rate (CAGR) of 39.6%. This extraordinary growth underscores the burgeoning demand for computational power, a need NVIDIA is uniquely equipped to meet.
NVIDIA’s GPUs are the backbone of these transformative technologies, powering applications in sectors such as automotive, healthcare and manufacturing. As businesses increasingly adopt generative AI to modernize operations, NVIDIA’s state-of-the-art chips have become essential infrastructure, driving massive demand for its products.
Given the surging demand for AI-driven technologies, NVIDIA is expected to report strong revenue growth in its upcoming earnings release. The company expects third-quarter fiscal 2025 revenues to reach $32.5 billion, driven by the increasing investments in AI within the datacenter market.
This anticipated growth reflects not only the strength of NVIDIA’s product offerings but also the broader shift toward AI and advanced computational models across industries. As businesses continue to integrate AI into their operations, NVIDIA’s GPUs are becoming increasingly essential, driving demand and, consequently, revenue growth.
Zacks Rank & Other Stocks to Consider
Currently, NVIDIA sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader technology sector are CyberArk Software CYBR, Fortinet FTNT and Twilio TWLO, each sporting a Zacks Rank #1 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CyberArk Software’s 2024 earnings has been revised 10 cents upward to $2.40 per share in the past seven days, which suggests a year-over-year increase of 114.3%. The company has an estimated long-term earnings growth rate of 20%.
The Zacks Consensus Estimate for Fortinet’s 2024 earnings has been revised upward by 17 cents to $2.18 per share in the past 30 days, which calls for an increase of 33.7% on a year-over-year basis. The company has an estimated long-term earnings growth rate of 17.8%.
The consensus mark for Twilio’s fiscal 2025 earnings has been revised upward by 6.7% to $3.64 per share over the past 30 days, which indicates a 48.6% increase from that reported in 2023. It has a long-term earnings growth expectation of 41.8%.
Zacks Investment Research
CyberArk Software CYBR reported third-quarter 2024 non-GAAP earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents. The bottom-line figure also showed a robust year-over-year improvement of 123.8%.
The solid year-over-year bottom-line performance was primarily driven by higher revenues, better cost management and increased financial income, partially offset by a higher number of outstanding shares.
CyberArk’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 97.7%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
CyberArk’s third-quarter 2024 revenues of $240.1 million exceeded the consensus mark by 2.7%. The top line jumped 26% year over year, primarily driven by the company’s robust dominance in identity security and world-class execution levels at every step while delivering an integrated platform with all sorts of solutions across the workforce from IT to developers and machines.
Buoyed by strong quarterly performance, CyberArk raised guidance for 2024 and issued impressive guidance for the fourth quarter. Strong third-quarter results, along with an impressive outlook, are expected to pull up its shares. On a year-to-date basis, shares of CyberArk soared 33.1% compared with the Zacks Computers - IT Services industry’s return of 16.3%.
CyberArk’s Q3 Details
CyberArk’s strong top-line performance can be attributed to the immense year-over-year rise in its Subscription revenues, partially offset by Maintenance and Perpetual Licenses.
Segment-wise, Subscription revenues (73.1% of the total revenues) were $175.6 million, up 42.9% from the year-ago quarter. Our estimate for Subscription revenues was pegged at $166.2 million.
CyberArk Software Ltd. Price, Consensus and EPS Surprise
CyberArk Software Ltd. price-consensus-eps-surprise-chart | CyberArk Software Ltd. Quote
Maintenance and professional services revenues (25.7% of the total revenues) were $61.6 million, lower than the year-ago quarter’s $64.3 million. Our estimate for Maintenance and professional services revenues was pegged at $63.4 million.
Perpetual license revenues (1.2% of the total revenues) plunged to $2.9 million from $4.1 million in the year-ago quarter. The decline reflects the company’s continued efforts toward shifting the business model to subscription-based from a perpetual license. Our estimate for Perpetual license revenues was pegged at $3.7 million.
CyberArk’s non-GAAP gross profit increased 26.7% year over year to $200.3 million. Moreover, the non-GAAP gross margin expanded 70 basis points (bps) to 83.4%, primarily driven by robust revenue growth.
The non-GAAP operating income increased 109.5% year over year to $35.4 million, while the operating margin expanded 590 bps to 14.7%.
CyberArk’s Key Business Metrics
In the third quarter, Annual Recurring Revenues (ARR) were $926 million, up 31% year over year. The Subscription portion of ARR was $735 million, or 79% of total ARR as of Sept. 30, 2024, up 46% year over year.
The Maintenance portion of ARR was $191 million as of Sept. 30, 2024, compared with $200 million as of Sept. 30, 2023. Recurring revenues in the third quarter were $224.2 million, up 29% from the third quarter of 2023.
CYBR’s Balance Sheet & Cash Flow
CyberArk had cash and cash equivalents, marketable securities and short-term deposits of $1.5 billion as of Sept. 30, 2024, compared with $1.4 billion as of June 30, 2024.
Long-term debt was $646.3 million as of Sept. 30, slightly higher than $646.1 million as of June 30.
Cash flow from operations was $54.2 million, up from $44.3 million as of June 30, 2024. Free cash flow was $51.6 million compared with the previous quarter’s $41.7 million.
During the first nine months of 2024, CyberArk generated $167.2 million of cash from operational activities.
CyberArk Raises FY24 Guidance
CyberArk raised guidance for 2024. The company now expects 2024 revenues in the range of $983-$989 million, up from the previous guidance of $932-$948 million. The Zacks Consensus Estimate for revenues is pegged at $939.1 million, suggesting a year-over-year rise of 24.9%.
It now expects non-GAAP operating income between $135 million and $140 million, up from the earlier projection of $107.5-$116.5 million. The company now estimates its non-GAAP earnings in the range of $2.85-$2.96 per share, up from the previous forecast of $2.17-$2.36 per share. The Zacks Consensus Estimate for earnings is pegged at $2.30 per share, indicating a year-over-year rise of 105.4%.
ARR, as of Dec. 31, 2024, is expected to be in the range of $1.153-$1.163 billion, indicating an increase of 49-50% year over year. The company expects free cash flow between $203 million and $213 million.
CyberArk also initiated guidance for the fourth quarter. For the fourth quarter, it expects revenues to be in the band of $297-$303 million, suggesting year-over-year growth of 33-36%. The Zacks Consensus Estimate for revenues is pegged at $258.5 million, suggesting a year-over-year rise of 15.8%.
Non-GAAP operating income is expected to be in the range of $43.5-48.5 million. Non-GAAP earnings per share are anticipated between 65 cents and 75 cents. The Zacks Consensus Estimate for earnings is pegged at 54 cents per share, indicating a year-over-year decline of 33.3%.
Zacks Rank & Other Stocks to Consider
Currently, CYBR sports a Zacks Rank #1 (Strong Buy) at present.
Blackberry BB, Amphenol APH and Advantest ATEYY are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.
BB, APH and ATEYY sport a Zacks Rank #1 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BB shares have plunged 31.1% year to date. It is set to report third-quarter fiscal 2025 results on Dec. 19, 2024.
APH shares have jumped 45.9% year to date. It is slated to release fourth-quarter 2024 results on Jan. 22, 2025.
ATEYY shares have surged 79.8% year to date. It is slated to report its third-quarter 2024 results on Jan. 29, 2025.
Zacks Investment Research
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