NetApp's Stock Soars 30%: Strong Buy Amid Cloud Growth

A recent report highlights NetApp's impressive stock performance, surpassing major indexes and boasting strong earnings. With sustained growth in cloud services and consistent EPS outperformance, investors are urged to consider NTAP as a viable long-term investment.

Date: 30-09-2024

AI Rating: 8

Stock Performance and EPS Consistency

NetApp's stock has shown remarkable resilience with a 30% increase this year, outperforming the S&P 500 and Nasdaq, which gained approximately 20%. This strong performance can be attributed to consistent earnings growth, with NetApp achieving or exceeding the EPS consensus for 18 consecutive quarters.

In the latest fiscal first quarter, NetApp posted an EPS of $1.56, outperforming estimates by roughly 7% and displaying a notable 36% increase from the previous year's $1.15 per share.

Cloud Services Revenue Growth

NetApp's cloud storage operations significantly contribute to its positive financial outcomes. The company's hybrid cloud segment revenue rose 8% last quarter to reach $1.38 billion. This segment blends on-premises infrastructure with public cloud services, enhancing NetApp's market position.

Additionally, partnerships with leading cloud platforms, such as Microsoft Azure and Amazon AWS, further position NetApp favorably in the market.

Future Outlook

Looking ahead, NetApp's total sales are projected to increase by 4% in fiscal 2025 and 2026, nearing $7 billion. Moreover, EPS is expected to grow by 9% in fiscal 2025 and 6% in fiscal 2026, reaching $7.54 per share, evidencing strong positive momentum. Recent earnings estimate revisions have been notably favorable for both fiscal years.

Valuation

With a forward earnings multiple of 17.5X, NTAP appears reasonably valued compared to its peers in the cloud computing sector. The ongoing growth in cloud partnerships could significantly influence NetApp's stock positively.

Stocks: NTAP MSFT AMZN