Enterprise search and data visualization expert Elastic (NYSE: ESTC) is soaring these days. The stock has gained 87% year to date and set fresh all-time highs nearly every week over the last three months. Is it too late to jump aboard the Elastic bandwagon at these lofty share prices? Let's take a look.
At first glance, Elastic's stock looks incredibly overvalued. Shares are trading at 22 times the company's trailing sales and 23 times Elastic's book value, and I can't even talk about price-to-earnings or cash flows because the company is reporting negative profits of every kind.
At the same time, Elastic's business is growing like crazy. Revenue rose 43% year over year in August's first-quarter report, and that was a slow quarter by this company's standards. Earnings are consistently negative, but they're moving closer to the break-even point, quarter by quarter. The top-line growth trend is more important than reaching positive earnings or cash flows anytime soon, however, and Elastic is investing heavily into additional growth-boosting projects. R&D expenses have more than tripled in two years, sowing the seeds for further growth:
Source Fool.com