Is Pure Storage a Good Tech Stock to Buy?

NYSE: PSTG | Pure Storage, Inc.  News, Ratings, and Charts

PSTG – Insiders have been unloading their shares of software-defined data storage solutions provider Pure Storage (PSTG), and the stock’s price has declined 13.1% year-to-date. However, given the robust investor optimism surrounding the industry, and PSTG’s stable revenue and earnings growth projections, is the stock an attractive investment bet now? Read more to find out.

Technology and data storage solutions provider, Pure Storage, Inc. (PSTG), which is based in Mountain View, Calif., delivers software-defined data storage solutions. The stock has gained 14.1% over the past year and 7.7% over the past five days.

However, company insiders have lately been selling shares of PSTG. Approximately 430,380 shares have been sold by two directors so far this year, and the stock price has slumped 13.1% year-to-date.

PSTG is currently trading below its 50-day and 200-day moving averages of $19.24 and $21.32, signaling a downtrend.

So, here’s what we think could shape PSTG’s performance in the near term:

Mixed Financials

PSTG has generated $1.73 billion in revenues over the past year. Its trailing-12-month gross profit came in at $1.17 billion, translating to a 67.89% margin. However, the company failed to break even in the trailing 12 months, as is operating and net loss stood at $238.10 million and $275.69 million, respectively. PSTG’s ROE, ROA, and ROTC stood at negative 37.45%, 6.01%, and 9.94%, respectively.

PSTG’s $1.23 billion of cash and cash equivalent holdings are higher than its $911.25 million total debt. This demonstrates unnecessary interest rate expenses borne on outstanding debt. However, the company has stable cash inflows, as evidenced by its $173.99 million and $117.42 million, respective trailing-12-month net operating cash and levered free cash flows.

PSTG’s relatively high current and quick ratios of 2.66 and 2.33, respectively, indicate inefficient use of short-term resources.

Mixed Growth Story

PSTG’s revenues increased at a 16.4% CAGR over the past three years and 2.7% year-over-year. In addition, the company’s levered free cash increased at a 42.9% CAGR  over the past three years but declined 24.2% over the past year.

Moreover, its tangible book value and total assets declined at a 23.2% rate over the past three years and 57.2% year-over-year.

Consensus Rating and Price Target Indicate Potential Upside

Of the six Wall Street analysts that rated PSTG, four rated it Buy while two rated it Hold. The $12-month $26.40 median price target indicates a 34.4% potential upside from yesterday’s closing price of $19.65. The price targets range from a low of $22.00 to a high of $33.00.

POWR Ratings Reflect Uncertain Prospects

PSTG has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

PSTG has a grade of C for Stability and Quality. The stock’s relatively high1.41  beta is in sync with the Stability grade. In addition, the company’s higher-than-industry gross profit margin and negative ROE justify the neutral Quality grade.

Of the three stocks in the A-rated Technology – Storage industry, PSTG is ranked last.

Beyond what we’ve stated above, we have rated PSTG for Momentum, Value, Growth, and Sentiment. Get all PSTG Ratings here.

Click here to view the top-rated stocks in the Technology – Storage industry.

Bottom Line

PSTG share price declined 3.1% intraday to close yesterday’s trading session at $19.65, at a time when the tech-heavy Nasdaq Composite registered five consecutive days of gains to close at a record 14,840.71 points. Though analysts expect PSTG to see stable growth in revenues and earnings next year, we think investors should wait until its profit margins improve before investing in the stock.


PSTG shares were trading at $19.09 per share on Tuesday afternoon, down $0.56 (-2.85%). Year-to-date, PSTG has declined -15.57%, versus a 17.79% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
PSTGGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

How to Beat the Market the Rest of the Year?

The easy gains that came at the start of this new bull market are fading away fast. In fact the stock market (SPY) has become quite volatile with gains harder to come by. Gladly there are solutions as will be shared in this commentary to get you on the right path to outperform the market through the end of 2021 and beyond. Read the rest below...

:  |  News, Ratings, and Charts

2022 Stock Market Outlook

The stock market (SPY) has continued on a bullish path in 2021. Will that continue in 2022? And what could happen to awaken the bear market from hibernation? 40 year investment veteran Steve Reitmeister explores this and more in this early edition of his 2022 Stock Market Outlook. Read on for full details below...

:  |  News, Ratings, and Charts

3 Cheap Healthcare Stocks to Buy Right Now

Healthcare stocks saw renewed interest due to the onset of the pandemic, but It’s not only COVID that is driving returns. The Baby Boomer generation is getting older, which is resulting in increased demand for healthcare products and services. That’s why investors should consider adding undervalued healthcare stocks such as Ironwood Pharmaceuticals, Inc. (IRWD), Nu Skin Enterprises, Inc. (NUS), and Bristol-Myers Squibb Co. (BMY) to their portfolio.

:  |  News, Ratings, and Charts

3 Value Stocks to Buy While You Still Can

After outperforming from last fall into the spring, value stocks have been overtaken by growth stocks, but that is expected to change as the economic recovery continues. So, now is the time to start putting your money to work in undervalued companies that offer the potential for strong returns such as Gilead Sciences Inc. (GILD), HP Inc. (HPQ), and CNH Industrial N.V. (CNHI).

:  |  News, Ratings, and Charts

3 Cheap Healthcare Stocks to Buy Right Now

Healthcare stocks saw renewed interest due to the onset of the pandemic, but It’s not only COVID that is driving returns. The Baby Boomer generation is getting older, which is resulting in increased demand for healthcare products and services. That’s why investors should consider adding undervalued healthcare stocks such as Ironwood Pharmaceuticals, Inc. (IRWD), Nu Skin Enterprises, Inc. (NUS), and Bristol-Myers Squibb Co. (BMY) to their portfolio.

Read More Stories

More Pure Storage, Inc. (PSTG) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All PSTG News