Splunk Inc. (SPLK) Stock Valuation — PE Analysis
Software - Infrastructure · NASDAQ
Current Price
$156.90
PE Ratio (TTM)
99.3x
Intrinsic Value
$109.56
-43.2% margin of safety
COMPETITIVE MOAT
↑Deeply embedded in IT infrastructure
Splunk's platform is critical for IT operations, logging, and security. This deep integration creates significant switching costs for customers.
↑Vast data processing and analytics capabilities
The company's ability to ingest, index, and analyze massive volumes of machine data provides unique insights. This scale advantage is difficult for competitors to replicate.
↑Strong ecosystem and partner network
Splunk has built a robust ecosystem of technology partners and a loyal customer base. This network effect enhances its value proposition.
INVESTMENT RISKS
↓Customer concentration and churn
While deeply embedded, a few large customers represent a significant portion of revenue. Losing even one could impact financial performance.
↓Integration challenges post-acquisition
The recent acquisition by Cisco presents integration risks. Ensuring seamless product and operational synergy is crucial for continued success.
↓Evolving threat landscape and AI
The rapid evolution of cyber threats and the rise of AI-powered attacks require constant innovation. Splunk must stay ahead to maintain its security relevance.
Base case
SPLK base case PE valuation
A base case PE valuation for SPLK estimates a fair value of about $109.56 per share, against a current price of $156.9. The model assumes 15.4% annual earnings growth, a 50x target PE multiple, and a 10% discount rate.
Intrinsic Value
$109.56
Margin of safety
-43.2%
Expected annual return
-6.9%
Base case assumptions: 15.4% annual earnings growth, 50x target PE, 10% discount rate, 5 year projection. Data as of 2024-03-15.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the SPLK PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Splunk Inc. respond.
Open PE Calculator for SPLKCompany Overview
Splunk Inc., through its subsidiaries, provides sophisticated software and cloud solutions that enable organizations to extract and operationalize valuable insights from the vast amounts of data produced by digital systems globally. At the core of its offerings is the Splunk Platform, a real-time data platform. This comprehensive platform integrates capabilities for data collection, streaming, indexing, searching, reporting, analysis, machine learning, alerting, continuous monitoring, and overall data management. The company also delivers specialized Splunk Solutions. Splunk Security solutions empower cybersecurity teams to streamline operations, accelerate threat detection and response, enhance threat visibility, and boost analyst productivity using machine learning and automation. For IT Operations teams, Splunk IT Solutions offer crucial visibility and control across both cloud and on-premises environments. Additionally, Splunk Observability Solutions are designed to assist in building and maintaining critical infrastructure and applications. Furthermore, Splunk supports an extensive Ecosystem Solutions portfolio, featuring pre-built data inputs, workflows, searches, reports, alerts, customizable dashboards, flexible UI components, and custom data visualizations. This ecosystem includes solutions like Splunk On-Call, Splunk Infrastructure Monitoring, and Splunk SOAR, all offering APIs and SDKs. These interfaces allow a broad network of third-party developers, partners, and customers to create custom content and extend Splunk's capabilities for specific applications. Beyond its software, Splunk provides various services, including adoption and implementation support, educational training, and ongoing maintenance and customer assistance. The company distributes its products directly through its field and inside sales teams, as well as indirectly through a diverse network of partners. Splunk Inc. was founded in 2003 and is headquartered in San Francisco, California.
Financial Metrics — SPLK PE Stock Valuation Data
PE Ratio (TTM)
99.3x
PEG Ratio
0.02
Earnings Yield
1.01%
ROE (TTM)
83.7%
Revenue/Share (TTM)
$25.22
Debt/Equity
4.40x
Frequently Asked Questions
What is the PE ratio of SPLK?
The trailing twelve-month PE ratio of SPLK reflects how much investors pay per dollar of Splunk Inc.'s earnings. This metric is most useful when compared to Software - Infrastructure peers and the company's own historical range.
Is SPLK overvalued based on PE ratio?
SPLK's PE of 99.3x combined with a PEG ratio of 0.02 provides a growth-adjusted perspective. A PEG below 1.0 means the P/E is low relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Software - Infrastructure, a DCF analysis may be more appropriate.
How do I value SPLK stock using PE ratio?
To value Splunk Inc. using PE: (1) Compare the current PE (99.3x) against the Software - Infrastructure median to assess relative pricing, (2) check the PEG ratio (0.02) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of SPLK?
SPLK's PEG ratio is 0.02, calculated by dividing the PE ratio (99.3x) by the expected earnings growth rate. A PEG below 1.0 means the P/E is low relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for SPLK stock valuation?
PE ratio gives a quick relative read — how SPLK is priced versus Software - Infrastructure peers. DCF provides an absolute value based on projected free cash flows. For SPLK, with a strong ROE of 83.7%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See SPLK DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value SPLK with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2024-03-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.