Salesforce.com (CRM), Palo Alto Networks (PANW), Workday (WDAY) and Splunk (SPLK) are top-rated software makers with earnings on tap this week.
All four have very high Composite Ratings. Salesforce has a best-possible 99 Composite Rating, Palo Alto Networks has a 98 CR, Workday 97 and Splunk 97. All-time stock winners often have Composite Ratings of at least 95 near the start of their big runs.
All four stocks found support near their 50-day moving averages during the brief stock market correction and quickly reclaimed buy points. They’ve hit new highs in the past week. All four stocks are at least slightly extended, but are worth watching. All four have relative strength lines that are at or near highs.
Salesforce.com, Palo Alto Networks and Splunk are all on IBD’s Rising Profit Estimates stock list.
Salesforce.com
The on-demand software pioneer and S&P 500 index component reports after the close Wednesday. Analysts expect revenue to rise 23% to $2.81 billion with earnings climbing 18% to 33 cents a share, according to Zacks Investment Research. Wall Street estimates billings growth of 17% to $5.1 billion vs. a 33% increase a year earlier.
Salesforce was the only one of these four stocks to close noticeably below its 50-day moving average during the correction. At one point, Salesforce fell as much as 6.3% below its 109.29 buy point, not quite enough to invalidate that entry. But the stock quickly rebounded back above its 50-day and buy point.
Shares hit a record high of 115.67 on Wednesday, setting a closing high of 114.96 on Friday.
Palo Alto Networks
The cybersecurity software firm reports fiscal Q2 earnings late Monday. Revenue should rise 24% to $524.75 million with EPS up 25% to 79 cents.
Palo Alto never closed below its 50-day line and by Feb. 14 was back above a 156.95 entry. Shares hit a record 167.73 on Wednesday, setting a closing high of 165.54 on Friday.
Workday
The human resources and payroll software company has been expanding into financial software.
Analysts see fourth-quarter earnings tripling to 21 cents a share, with revenue climbing 31% to $574 million. Workday has sailed well above EPS views for the past five quarters, so investors may be pricing in another big beat.
Workday fell below its 114.98 buy point on Feb. 8 but by Feb. 10 was back in that zone. Shares hit a record 128.32 on Wednesday, reaching a closing best of 127.33 on Friday.
Splunk
The data analytics software firm is expected to report earnings per share of 34 cents, up 36% vs. a year earlier. Revenue is set to rise 28% to $391 million.
Splunk shares closed pennies below the 50-day line on Feb. 8 and briefly undercut an 84.98 buy point on Feb. 9, when the S&P 500 index rebounded from its 200-day line, marking a market low. Splunk’s stock did roundtrip a 10% gain (10.2%) from the breakout, but only for a few minutes. Investors who didn’t exit Splunk at the Feb. 9 low could certainly be justified in holding the stock since then. By Feb. 15, Splunk was at a record high. Shares closed Friday just below that peak.
