2024-02-14 16:19:46 ET
Summary
- Samsara shares have soared 150% since I wrote about the company 12 months ago.
- The company has seen exceptional operational performance, with sales growth, new customer acquisition, and profitability.
- The company has notable competitive advantages when selling to enterprise customers.
- The company has broadened its customer base to beyond trucking and its equipment monitoring offering is now more than 10% of ARR.
- Despite these positives, I rate the shares a hold based on very high relative valuation.
The stock is up substantially-is it still a worthwhile investment?
It has been about a year since I wrote my initial article on Samsara (IOT) - the company and its share price prospects. The shares have been one of the strongest performers in the IT space since the time of that article - the shares are up over 150% since the article was published on SA on 2/2/23. Back then, I liked the concept of an integrated suite of solutions to manage physical assets. I felt that a platform that could optimize utilization, create vehicle safety guardrails and provide enterprises with a way of viewing their assets and their utilization from a single pane of glass was an excellent business with great opportunities. Over the last year , as the company has enhanced its platform and has had success outside of the transportation vertical my conviction regarding Samsara’s business has increased. But increased conviction about a model is not the same as remaining positive about the outlook for Samsara stock.
Over the last year the company’s operational performance has been exceptional. Sales have continued to grow in the 40% range, new customer acquisition has been at record levels. The company reached non-GAAP profitability last quarter and has achieved 2 consecutive quarters of positive free cash flow. Not surprisingly all of the quarters over the past year have been beats, and all of the quarterly forecasts have been increased. The shares reached an all-time high in mid-December and since then have drifted down by about 5% +. The shares, for the most part, have shrugged off a virulent short attack by activist short seller, Spruce Capital....
Read the full article on Seeking Alpha
For further details see:
Revisiting My Samsara Recommendation After A Year