Freshworks Inc. (FRSH) Clearly Signals Buy-Into the Stock: Don’t ignore the signals

Freshworks Inc. (NASDAQ: FRSH) stock fell -0.60% on Monday to $19.89 against a previous-day closing price of $20.01. With 3.28 million shares changed hands, the volume of the stock remained heavier than its average volume of 3.13 million shares. During the session, the Software – Application company that operates in wider Technology sector, reached to the highest price of $19.97 whereas the lowest price it dropped to was $19.49. The 52-week range on FRSH shows that it touched its highest point at $23.80 and its lowest point at $11.92 during that stretch. It currently has a 1-year price target of $25.33. Beta for the stock currently stands at 0.83.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of FRSH was down-trending over the past week, with a drop of -10.53%, but this was down by -5.73% over a month. Three-month performance surged to 18.96% while six-month performance rose 44.87%. The stock gained 27.42% in the past year, while it has gained 35.21% so far this year. A look at the trailing 12-month EPS for FRSH yields -0.66 with Next year EPS estimates of 0.28. For the next quarter, that number is 0.05. This implies an EPS growth rate of 92.10% for this year and 42.50% for next year.

Float and Shares Shorts:

At present, 292.00 million FRSH shares are outstanding with a float of 167.51 million shares on hand for trading. On Aug 30, 2023, short shares totaled 13.95 million, which was 4.75% higher than short shares on Jul 30, 2023. In addition to Mr. Rathna Girish Mathrubootham as the firm’s Co-Founder, CEO & Chairman, Mr. Dennis M. Woodside serves as its Pres & Director.

Institutional Ownership:

Through their ownership of 71.49% of FRSH’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 32.69% of FRSH, in contrast to 27.94% held by mutual funds. Shares owned by individuals account for 17.62%. As the largest shareholder in FRSH with 8.20% of the stake, The Vanguard Group, Inc. holds 15,708,283 shares worth 15,708,283. A second-largest stockholder of FRSH, Ward Ferry Management Ltd., holds 12,871,086 shares, controlling over 6.72% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in FRSH, holding 10,764,331 shares or 5.62% stake. With a 2.41% stake in FRSH, the Vanguard Total Stock Market ETF is the largest stakeholder. A total of 4,616,533 shares are owned by the mutual fund manager. The Vanguard Small Cap Index Fund, which owns about 2.06% of FRSH stock, is the second-largest Mutual Fund holder. It holds 3,943,927 shares valued at 86.25 million. iShares Russell 2000 ETF holds 1.90% of the stake in FRSH, owning 3,631,038 shares worth 79.41 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2023, FRSH reported revenue of $121.43M and operating income of -$67.35M. The EBITDA in the recently reported quarter was -$64.55M and diluted EPS was -$0.24.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for FRSH since 0 analysts follow the stock currently. In the same way, a target price assigned to a stock can also reveal much about its potential. With FRSH analysts setting a high price target of $28.00 and a low target of $22.00, the average target price over the next 12 months is $25.47. Based on these targets, FRSH could surge 40.77% to reach the target high and rise by 10.61% to reach the target low. Reaching the average price target will result in a growth of 28.05% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy.

Summary of Insider Activity:

Insiders traded FRSH stock several times over the past three months with 18 Buys and 18 Sells. In these transactions, 10,298,129 shares were bought while 10,212,820 shares were sold. The number of buy transactions has increased to 83 while that of sell transactions has risen to 44 over the past year. The total number of shares bought during that period was 21,837,878 while 17,395,474 shares were sold.

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