Samsara is the IBD Stock of the Day for Friday, as shares of the Internet-of-Things platform provider approach a buy point from a cup-with-handle base.
Samsara stock is ahead about 15% year to date, after racking up a nearly 170% gain in 2023. The nine-year-old company provides sensors and cloud-based software that help manage vehicle fleets and industrial operations. That includes dashcams tied to AI-powered software. The company's IOT stock is on the IBD 50 stock list.
On the stock market today, Samsara stock slipped a fraction to close at 38.23. Shares gained 7% in Thursday trading.
The San Francisco-based company will report results for its July-ended second quarter on Sept. 5. Shares have proved volatile in the past following earnings results, including a 12% drop following Samsara's Q1 report in June and 14% jump after it reported fiscal fourth-quarter results in March.
Samsara Stock: Serving Industrial Operators
Samsara's platform is focused on utilizing the Internet of Things and cloud-based software to allow industrial and infrastructure companies to monitor their operations for efficiency and safety.
"We're talking about the companies that do waste management for all of us in our communities," Chief Executive Sanjit Biswas said at a June 27 company presentation for analysts. "The construction companies that build our roads and highways and our buildings. The chemicals carriers who are working behind the scenes. The transportation companies who run our supply chains, but also the food and beverage companies that feed us all."
Samsara provides those companies with what Biswas described as a system of record for their operations. It uses AI and other tools to offer insights from vast sets of data. The company sees a big opportunity ahead as many industrial sectors are early in digitizing their operations.
Samsara completed an initial public offering on the New York Stock Exchange in December 2021. Shares slumped along with the broader market in 2022 but are up more than 60% from their IPO price after rallying last year.
Analysts with Bank of America initiated coverage of Samsara in late June with a buy rating. Analyst Matt Bullock said the company is "revolutionizing" roadway safety with AI-enabled dashcams and software for real-time coaching.
"We view Samsara's fleet-focused offerings as best-in-class, and expect positive demand trends and continued market share capture to drive upside to Street estimates," Bullock wrote in a June 20 research note.
Overall, 10 out of 16 analysts following the stock rate Samsara a buy. The other six hold neutral ratings, according to FactSet.
Samsara Q2 Earnings Due Soon
The next big test for Samsara comes early next month with its fiscal second quarter report.
Analysts expect adjusted earnings of 1 cent per share for the July-ended period, according to FactSet, roughly even with the same quarter in 2023. Sales are seen rising 32% year over year to $289.5 million.
For its first quarter, Samsara sales grew 37% to $281 million. ARR, or annual recurring revenue, grew 37% in the April-ended quarter to $1.18 billion. The company had 1,964 customers that contributed over $100,000 annually to its ARR as of April, up 43% from a year earlier.
But BofA's Bullock noted in his June report that a "smaller-than-expected beat/raise" pressured shares following the fiscal Q1 report. The stock fell 12% June 7, the day after Samsara published its earnings statement. Samsara stock hit a 2024 low of 27.14 on June 17 before bouncing back with big gains in July.
A recent high of 39.21 on July 31 represents the buy point on the cup-with-handle base. Samsara stock lost 3.5% on Aug. 2, as the broader market slumped in response to a weaker-than-expected U.S. jobs report. But shares have bounced back this week, helping form a handle on the chart.
Samsara stock undercut its 21-day and 50-day moving averages on Monday but bounced back to close above both levels. With the market in correction, there is risk that IOT could fall with other stocks should the market falter any further.
Technical Ratings For Samsara Stock
Samsara stock's Relative Strength Rating has improved in recent weeks to reach 91 out of a best-possible 99. The RS Rating means that Samsara has outperformed 91% of all stocks in IBD's database over the past year.
Meanwhile, Samsara's IOT stock holds an IBD Composite Rating of 85 out of a best possible 99, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks typically have a Composite Rating of 90 or better.
Samsara stock has an Accumulation/Distribution Rating of D. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates heavy selling by funds.
