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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Pure Storage, Inc. (XNYS:PSTG) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
PSTG
Name:
PURE STORAGE, INC. (XNYS:PSTG)
Sector:
- 6381.00K
Industry:
Computer Hardware
CEO:
Mr. Charles Giancarlo
Total Employees:
4,300
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -163.86% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF PURE STORAGE, INC.(PSTG) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND COMPUTER HARDWARE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
29.16
One Month Price Target:
$29.38
Six Month Price Target :
$30.48
Likely Price in One Year's Time:
Ticker:
$31.81
Likely Trading Range Today Under (Normal Volatility)
$29.03
Price Upper limit ($) :
$29.37
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$27.17
This week:
$24.72
This month :
$20.28
Other Primary facts
Market Cap:
8.50B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
296.02M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.16%
-23.72%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$38.37
$34.09
$19.95
$24.23
Medium risk (<10%) entry points
Buy Call
Sell Call
$32.70
Buy Put:
Sell Put:
$31.78
$25.61
$26.54
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
PSTG
Sharpe Ratio:
3.92%
Comparison:
PSTG, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 20.71% higher than the industry
& ratio is 72.18% higher than the market/S&P 500 average
Average Returns/Yield of
PSTG
Daily returns:
0.14%
Weekly returns:
0.71%
Monthly returns:
2.84%
Yearly returns:
26.14%
Comparison of returns:
Average annual returns/yield (last 3 years) is 30.15% above industry average
Classification:
PSTG, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.48
Statistical test of Returns:
PSTG has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.39%
Weekly Volatility:
7.57%
Monthly Volatility:
15.14%
Yearly Volatility:
52.46%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.61%
Volatility in last five trading days has been -22.98% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.81%
Weekly VaR:
-15.23%
Monthly VaR:
-30.47%
How Much Can the price of
PSTG
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-25%
Worst case (decline):
>85%
This translates to price declining to:
$21.78
This translates to price declining to:
$4.37
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
PSTG is a 115.05% riskier investment compared to the market/S&P 500 & is 84.23% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 6.52% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
PSTG
Beta in relation to market/S&P 500--1.35
Expected beta in 1 year's time:
0.94
Expected beta in 3 year's time:
1.329
Unlevered (debt free) Beta:
0.571
Beta in relation to Nasdaq (XNAS):
1.269
Beta in relation to all global stocks::
0.971
Beta Comparison & Analysis
Beta of competitors/peers::
1.515
Beta is -10.74% lower than peers
Average Industry Beta:
1.224
Beta is 10.45% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
0.216
Alpha is 47.97% above industry average alpha yield
Alpha is 1376% higher than market/& is unsustainably high
Analysis of Cost of Capital of
PSTG
Equity cost of capital:
0.124
Equity cost of capital is 7.59% above industry mean WACC
Unlevered (without debt) cost of capital:
5.24%
Before-tax cost of debt:
2.09%
After-tax cost of debt:
1.65%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.65%
WACC is -7.81% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$7.37
Revenue growth rate per share of (3Y):
12.06
Annual revenue growth rate is -42.47% below industry average
EPS:
-$0.25
Expected Annual growth rate of EPS (3Y):
-13.40%
Expected future EPS growth rate is -163.55% lower than the Computer Hardware industry
Free cash flow (FCF) per share:
$1.11
-
-
Debt per share
$2.96
EBITDA per share
-$0.09
Valuation Analysis Today of
PSTG
P/E Ratio:
0
P/E Ratio of Competitors/Peers:
15.96
P/E ratio is -100.00% lower than main peers & is higher than the industry
-
PSTG is -970.04% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
3.96
Price to sales ratio is 40.26% above the industry mean
P/B (Price to book value ratio):
12.06
Price to free cash flow: 26.22
Price to free cash flow ratio is -61.07% lower than the industry
Net income growth rate (3Y):
25.49%
Net income growth rate is -72.36% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
122.63%
Net debt to equity ratio:
85.32%
Debt to assets ratio:
32.52%
Net debt to assets ratio:
22.63%
Debt-to-asset ratio is -47.02% below industry average
Ability to repay debt:
Interest coverage ratio:
-1.38
Interest coverage ratio is -128.08% less than industry average
Looking forward:
Debt growth rate:
-35.73%
Annual debt growth is -234% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.04%
Analysis of Key Statistics
Correlation of price movement with the market:
0.644
Statistical significance of correlation:
PSTG has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.599
Stock price is 7.39% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.599
Correlation of price movement with Nasdaq (^IXIC):
0.018
Covariance of price movement with the market:
0.035
Kurtosis
7.328
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.147
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
PSTG
Gross Profit Margin Ratio:
270%
Operating Profit Margin Ratio:
-4.51%
Operating profit margin is -159.71% lower than the industry
Net Profit Margin Ratio:
270%
Effective Tax Rate:
-11.49%
Effective tax rate is -171.20% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-20.02%
Return on equity (ROE) is -249.70% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
-5.31%
Return on assets (ROA) is -171.17% lower than the industry
Financial Leverage:
1.5x
Current Ratio:
2.66
Current ratio is 15.22% above industry average
Cash Conversion Cycle (days):
41.6
Cash conversion cycle is -47.79% below industry average
The remaining useful life of property plant & equipment is: 7.8 years
Stock based compensation to net income ratio:
-42.81%
In-depth Efficiency Analysis
Revenue generated per employee:
507.2K
Each employee generates -30% less revenue than industry average revenue per employee
EBITDA generated per employee:
- 6.1K
Each employee generates -106% less EBITDA than industry average revenue per employee
Profit generated per employee:
- 33.3K
Each employee generates -148% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 1.5K
Each employee generates -112% less free cash flow than industry average revenue per employee
Assets/Capital per employee
212.5K
Each employee generates -112% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 10.79%
Growth rate in R&D investment/expenditure is -737.75% lower than the industry
Competitors/Peer firms of
PSTG
GUIDEWIRE SOFTWARE, INC. (XNYS:GWRE)
DXC TECHNOLOGY COMPANY (XNYS:DXC)
Full Truck Alliance Co Ltd (XNYS:YMM)
SMARTSHEET INC. (XNYS:SMAR)
ENDAVA PLC (XNYS:DAVA)
Telus International (Cda) Inc (XNYS:TIXT)
PROCORE TECHNOLOGIES, INC. (XNYS:PCOR)
AVALARA, INC. (XNYS:AVLR)
PAGSEGURO DIGITAL LTD. (XNYS:PAGS)
Current Analyst Ratings
Strong buy�21%
Buy�38%
Hold�25%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
8/25/22
Revenue:
2.18B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
708.33M
1.47B
581.94M
189.98M
988.98M
799.00M
-
1.57B
4.27M
19.01M
83.15M
- 26332.00K
- 98398.00K
- 143259.00K
- 128496.00K
14.76M
- 143259.00K
Statement of Cash Flow
Date:
Period:
18.83M
Differed Income Tax :
-
Stock Based Compensation :
61.33M
Change in Working Capital :
15.47M
Accounts Receivables:
133.38M
Other Working Capital:
- 60325.00K
Other Non-Cash Items:
10.02M
Net Cash Provided by Operating Activities:
21.45M
Investments in PP&E:
- 27829.00K
Net Acquisitions:
-
Purchases of Investments:
- 171563.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
5/2/21
2022
Q1
300.81M
933.38M
1.23B
327.51M
49.29M
173.09M
1.78B
301.96M
358.74M
72.35M
-
-
180.82M
913.87M
-
2.70B
40.56M
33.89M
3.64M
458.71M
137.15M
670.30M
877.37M
27.34M
1.31B
-
1.98B
28.00K
- 1649218.00K
4.8M
2.36B
May 2, 2021 at 6:00:00 AM
2.28B
715.47M
2.70B
-
911.25M
610.4M
151.28M
-
- 48115.00K
- 344.00K
-
- 30020.00K
-
20.69M
- 9672.00K
-
- 36339.00K
311.35M
347.69M
21.45M
- 27829.00K
- 6381.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
PSTG
2023
2024
2025
2026
2027
$26.97
$29.42
$32.09
$35.01
$38.19