Datadog (DDOG) Outpaces Stock Market Gains: What You Should Know

In the latest trading session, Datadog (DDOG) closed at $97.03, marking a +0.41% move from the previous day. The stock outpaced the S&P 500’s daily gain of 0.34%. Meanwhile, the Dow gained 0.1%, and the Nasdaq, a tech-heavy index, added 0.02%.

Coming into today, shares of the data analytics and cloud monitoring company had lost 14.89% in the past month. In that same time, the Computer and Technology sector lost 12.4%, while the S&P 500 lost 7.95%.

Investors will be hoping for strength from Datadog as it approaches its next earnings release. In that report, analysts expect Datadog to post earnings of $0.16 per share. This would mark year-over-year growth of 23.08%. Meanwhile, our latest consensus estimate is calling for revenue of $412.63 million, up 52.55% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.78 per share and revenue of $1.62 billion, which would represent changes of +62.5% and +57.68%, respectively, from the prior year.

Any recent changes to analyst estimates for Datadog should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Datadog currently has a Zacks Rank of #3 (Hold).

In terms of valuation, Datadog is currently trading at a Forward P/E ratio of 123.18. Its industry sports an average Forward P/E of 43.85, so we one might conclude that Datadog is trading at a premium comparatively.

We can also see that DDOG currently has a PEG ratio of 2.92. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Internet – Software industry currently had an average PEG ratio of 2.51 as of yesterday’s close.

The Internet – Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 140, which puts it in the bottom 45% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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