Why the Market Dipped But Dynatrace (DT) Gained Today

Zacks
01 Jan

Dynatrace (DT) closed at $54.35 in the latest trading session, marking a +0.46% move from the prior day. This move outpaced the S&P 500's daily loss of 0.43%. Meanwhile, the Dow lost 0.07%, and the Nasdaq, a tech-heavy index, lost 0.9%.

Prior to today's trading, shares of the software intellegence company had lost 4.01% over the past month. This has lagged the Computer and Technology sector's gain of 2.86% and the S&P 500's loss of 1.98% in that time.

The upcoming earnings release of Dynatrace will be of great interest to investors. The company is predicted to post an EPS of $0.33, indicating a 3.13% growth compared to the equivalent quarter last year. Meanwhile, our latest consensus estimate is calling for revenue of $426.5 million, up 16.82% from the prior-year quarter.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $1.32 per share and a revenue of $1.67 billion, signifying shifts of +10% and +16.84%, respectively, from the last year.

Investors should also note any recent changes to analyst estimates for Dynatrace. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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 has remained steady. Dynatrace presently features a Zacks Rank of #3 (Hold).

Looking at its valuation, Dynatrace is holding a Forward P/E ratio of 40.96. This valuation marks a premium compared to its industry's average Forward P/E of 28.1.

One should further note that DT currently holds a PEG ratio of 4.07. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. DT's industry had an average PEG ratio of 2.82 as of yesterday's close.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 83, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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