Tableau Software Inc (DATA) is an interesting company, and not just because of its “big data” label that gets tech investors all in a tizzy.
In addition to providing analytics for businesses, Tableau Public provides a great free resource for all manner of disciplines by making it easy to visualize data and tell a story — such as this recent rundown of the history of the Dow 30.
But I have to say that despite the promise of the platform and the value I personally find in Tableau’s tools, I’m even higher on DATA stock itself.
And investors should consider the 33% year-to-date run-up in Tableau stock as a preview of things to come, because it seems only the beginning for the fledgling tech stock.
Big Data Stock Meets Big Expectations
I want to reiterate the difference between Tableau stock and its products, because a big sticking point for me is the difference between buying the narrative as a consumer and digging into the underlying fundamentals of the business. My favorite example is Twitter (TWTR) — a service I rely on as a consumer (Tweet me anytime @JeffReevesIP), but a company that has serious bottom-line challenges and difficulties with growth.
Tableau stock’s products are great and useful to me — but unlike TWTR, the fundamentals of this big data stock are equally compelling to me as an investor.
Revenue Growth is Stellar: Tableau went public in 2013, but has easily delivered on its top-line promise. Revenue soared from $127 million in FY2012 to $232 million in FY2013 for 82% growth, then jumped to $412 million in FY2014 for another 78% growth on top of that. Projections for this year are for an additional 50% revenue growth, to boot.
Tableau Stock is Soundly Profitable: Despite making major investments in its growth, Tableau is about to see earnings soar from a mere 8 cents per share in the last fiscal year to 40 cents per share this year — and a projected 67 cents a share in fiscal 2016. This is crucial, considering how many tech stocks are failing to see profits, even as revenue accelerates.
Big Earnings Beats: Each of the last four quarters has shown an earnings surprise of more than 200%, with DATA trouncing forecasts. This shows Wall Street continues to underestimate Tableau stock, and that expectations may be a bit low.
Look, I know that “big data” is one of those insufferable buzz phrases in Silicon Valley that makes you want to punch a programmer. Many companies and investors think that just because you can put information in a spreadsheet, it matters. As a guy who has seen one PowerPoint chart too many, I can tell you that this is decidedly not the case.
And, admittedly, Tableau is stretched on the valuation front with a forward P/E north of 100 and a price/sales that is in the double digits.
But this kind of premium for growth in the tech sector is not uncommon, particularly when the promise is so large. Tableau stock is the real deal, and has good momentum in 2015 after strong earnings and year-to-date outperformance to prove that.
I don’t blame you if you are reluctant to buy DATA stock because of the hype. But look at the fundamentals and you’ll agree there’s much more to investing in Tableau stock then simply blindly following the latest tech fad.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
