Cloudflare, Inc. (NET) Hit a 52 Week High, Can the Run Continue?

Shares of Cloudflare (NET) have been strong performers lately, with the stock up 9.3% over the past month. The stock hit a new 52-week high of $123.13 in the previous session. Cloudflare has gained 14.3% since the start of the year compared to the 37.2% move for the Zacks Computer and Technology sector and the 41.7% return for the Zacks Internet - Software industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 7, 2024, Cloudflare reported EPS of $0.2 versus consensus estimate of $0.18.For the current fiscal year, Cloudflare is expected to post earnings of $0.84 per share on $1.66 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $1.03 per share on $2.07 billion in revenues. This represents a year-over-year change of 13.76% and 24.78%, respectively.Valuation MetricsCloudflare may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.Cloudflare has a Value Score of F. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.In terms of its value breakdown, the stock currently trades at 146.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 29.4X. On a trailing cash flow basis, the stock currently trades at 457.6X versus its peer group's average of 27.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cloudflare currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cloudflare fits the bill. Thus, it seems as though Cloudflare shares could have potential in the weeks and months to come.How Does NET Stack Up to the Competition?Shares of NET have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Twilio Inc. (TWLO). TWLO has a Zacks Rank of # 2 (Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of C.Earnings were strong last quarter. Twilio Inc. beat our consensus estimate by 17.24%, and for the current fiscal year, TWLO is expected to post earnings of $4.36 per share on revenue of $4.42 billion.Shares of Twilio Inc. have gained 1.1% over the past month, and currently trade at a forward P/E of 25.81X and a P/CF of 137.82X.The Internet - Software industry is in the top 16% of all the industries we have in our universe, so it looks like there are some nice tailwinds for NET and TWLO, even beyond their own solid fundamental situation.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cloudflare, Inc. (NET): Free Stock Analysis Report Twilio Inc. (TWLO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks