The monday.com stock price (MNDY), which will be released on Monday, when the company releases its financial results, will come under the spotlight. The stock price has had a good year. It is up 12%, and nearing its highest point since January 2022.
Monday.com has grown.
Monday.com, a company with rapid growth, offers software to businesses around the globe. It offers a Work Operating System which allows people to collaborate and organise projects with ease.
The company continues to add new services in order to enhance its ecosystem. The company has introduced monday dev and monday workflows as well as monday CRM and workcanvas.
In the last few years, these solutions helped to grow the revenue of the company. In 2019, the company generated over $78.1million in revenue, a number that grew to $729million in the previous financial year. The total number of paid users has risen to more than 225,000.
Monday.com is a company that operates in an industry with a high level of competition. Its biggest competitors include Salesforce, Atlassian Zoho ClickUp Wrike Notion Airtable Asana Asana, Atlassian ClickUp Wrike Wrike Notion Airtable Asana
The competition may limit the future growth of this company, as many businesses already use one or more of them.
In most cases companies do not change the software they use for project management and communication because it is time-consuming. Monday.com’s net retention rate is over 110%.
MNDY Financial Results Ahead
If the company is growing, its financial results will be released on Monday.
Its revenue grew to $868 millions in the past quarter. This is a significant increase over the $649million it earned in the same period in 2023. In Q1 2021 it made $236 millions, indicating that the business is flourishing. The number of clients paying more than $50k per year increased.
Analysts believe that the business of monday.com continued to do well during the past quarter. The revenue is projected to be $228 million. This represents a 30% growth from 2023.
Its earnings per share are expected to increase from 41 cents up to 56 cents. Monday.com is likely to beat this number, as it did in previous quarters.
The company’s guidance for revenue is expected to reach $947 millions, which represents a 30 percent increase over the $729-million it earned a year ago. The company will reach over $1.2 billion by 2026 if this trend is maintained.
This report will not only focus traders’ attention on the main topic. Its margins will continue to rise, and that is the most important thing. The company had a gross profit margin of 90 % and a net profit margin of 2.5 % in the previous quarter. This means that they need to increase them.
MNDY valuation
Monday.com’s growth trajectory, and its potential future margins suggest that the company is undervalued.
The company has a value of more than $10 billion, and it is projected to earn over $1.2billion in 2026. We can estimate the future profit of this company by comparing it to its larger peers once it has moved past its growth phase.
Salesforce is the best comparison. Salesforce owns Slack, among other brands. The company has a net profit margin of 15% and gross profits of 76%. Microsoft is another major player in SaaS. It has gross and net margins of respectively 69% and 35 %.
monday.com’s gross margins are higher than those of these other companies. We can therefore assume its future business will enjoy a profit margin at least of 40%. Monday.com’s estimated revenue in 2026 is $1.2 billion, which means it can earn over $480 millions in profits per year.
We can therefore assume, that the firm is undervalued, because it has over $1.2 Billion in cash.
The Rule of 40 is a great way to evaluate SAAS businesses. The rule of 40 is used to add the YoY growth in revenue and profit margin.
Monday.com had a revenue increase of 34%, and an operating margin at 16%. The rule of forty figure is 50%. This means that the stock has a reasonable value.
Stock price analysis on Monday.com
MNDY’s share price does not look good on the daily chart. Recently, it has fallen sharply after forming the double-top at $250. This is usually one of the worst signs on the market. This pattern has moved also below its neckline.
Stocks have also fallen below their 50-day average moving price, indicating that they are more vulnerable. The stock formed an inverse Head and Shoulders pattern which is considered a positive sign.
The stock is likely to be volatile following earnings. Support and resistance will be at $230 and $180.
The rule of forty may change as the updates unfold. This is a post about monday.com: cheap stock ahead of earnings.
