We assign a fundamental rating of 4 out of 10 to ESTC. ESTC was compared to 278 industry peers in the Software industry. While ESTC seems to be doing ok healthwise, there are quite some concerns on its profitability. ESTC is valued quite expensively, but it does show have an excellent growth rating.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

ESTC had positive earnings in the past year.
ESTC had a positive operating cash flow in the past year.
ESTC had negative earnings in 4 of the past 5 years.
ESTC had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

ESTC has a Return On Assets (-4.41%) which is in line with its industry peers.
ESTC's Return On Equity of -12.27% is in line compared to the rest of the industry. ESTC outperforms 45.68% of its industry peers.

		Industry Rank	Sector Rank
ROA	-4.41%
ROE	-12.27%
ROIC	N/A

ROA(3y)-4.99%

ROA(5y)-8.13%

ROE(3y)-20.84%

ROE(5y)-28.06%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

The Gross Margin of ESTC (75.54%) is better than 67.63% of its industry peers.
In the last couple of years the Gross Margin of ESTC has remained more or less at the same level.
ESTC does not have Profit Margin and Operating Margin available, so we won't be analyzing them here.

		Industry Rank	Sector Rank
OM	N/A
PM (TTM)	N/A
GM	75.54%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y0.6%

GM growth 5Y0.85%

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ROA

ROE

ROIC

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2. Health

2.1 Basic Checks

ESTC does not have a ROIC to compare to the WACC, probably because it is not profitable.
Compared to 1 year ago, ESTC has more shares outstanding
ESTC has more shares outstanding than it did 5 years ago.
ESTC has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 3.34 indicates that ESTC is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.34, ESTC is in the better half of the industry, outperforming 64.75% of the companies in the same industry.
The Debt to FCF ratio of ESTC is 1.89, which is an excellent value as it means it would take ESTC, only 1.89 years of fcf income to pay off all of its debts.
ESTC's Debt to FCF ratio of 1.89 is fine compared to the rest of the industry. ESTC outperforms 68.70% of its industry peers.
ESTC has a Debt/Equity ratio of 0.64. This is a neutral value indicating ESTC is somewhat dependend on debt financing.
ESTC has a Debt to Equity ratio of 0.64. This is in the lower half of the industry: ESTC underperforms 69.42% of its industry peers.
Even though the debt/equity ratio score it not favorable for ESTC, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.64
Debt/FCF	1.89
Altman-Z	3.34

ROIC/WACCN/A

WACC7.75%

2.3 Liquidity

ESTC has a Current Ratio of 1.97. This is a normal value and indicates that ESTC is financially healthy and should not expect problems in meeting its short term obligations.
ESTC has a Current ratio of 1.97. This is comparable to the rest of the industry: ESTC outperforms 58.27% of its industry peers.
ESTC has a Quick Ratio of 1.97. This is a normal value and indicates that ESTC is financially healthy and should not expect problems in meeting its short term obligations.
ESTC's Quick ratio of 1.97 is in line compared to the rest of the industry. ESTC outperforms 58.99% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.97
Quick Ratio	1.97

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

ESTC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 54.97%, which is quite impressive.
ESTC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 16.98%.
Measured over the past years, ESTC shows a very strong growth in Revenue. The Revenue has been growing by 28.24% on average per year.

EPS 1Y (TTM)54.97%

EPS 3YN/A

EPS 5YN/A

EPS Q2Q%8.47%

Revenue 1Y (TTM)16.98%

Revenue growth 3Y19.81%

Revenue growth 5Y28.24%

Sales Q2Q%15.91%

3.2 Future

Based on estimates for the next years, ESTC will show a very strong growth in Earnings Per Share. The EPS will grow by 32.54% on average per year.
ESTC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.79% yearly.

EPS Next Y22.47%

EPS Next 2Y18.6%

EPS Next 3Y18.3%

EPS Next 5Y32.54%

Revenue Next Year16.54%

Revenue Next 2Y15.11%

Revenue Next 3Y14.7%

Revenue Next 5Y15.79%

3.3 Evolution

The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

ESTC is valuated quite expensively with a Price/Earnings ratio of 31.72.
Based on the Price/Earnings ratio, ESTC is valued a bit cheaper than the industry average as 60.79% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of ESTC to the average of the S&P500 Index (28.87), we can say ESTC is valued inline with the index average.
ESTC is valuated quite expensively with a Price/Forward Earnings ratio of 25.86.
ESTC's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ESTC is cheaper than 62.95% of the companies in the same industry.
ESTC is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.96, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	31.72
Fwd PE	25.86

4.2 Price Multiples

Based on the Price/Free Cash Flow ratio, ESTC is valued a bit cheaper than the industry average as 72.30% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	25.86
EV/EBITDA	N/A

4.3 Compensation for Growth

ESTC's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ESTC's earnings are expected to grow with 18.30% in the coming years. This may justify a more expensive valuation.