MuleSoft: High-Risk, Small Cap Buy

09/19/2017 2:57 am EST


Rob DeFrancesco

Founder, Tech-Stock Prospector

MuleSoft (MULE), provider of an application integration platform, is added to our small-cap model portfolio, notes technology sector expert Rob DeFrancesco, editor of Tech-Stock Prospector.

Get Trading Insights, MoneyShow’s free trading newsletter »

The company is benefiting from disrupting the $32-billion market for integration software. MuleSoft offers an efficient alternative to pricey custom integration solutions and clunky legacy offerings from traditional vendors, such as IBM (IBM) and Oracle (ORCL).

MuleSoft shares have pulled back to the low $20s despite the company's strong Q2 earnings report. Revenue growth in the latest quarter accelerated to 57% from 56% in Q1.


The market cap stands at $2.71 billion. There's $337.1 million in cash & investments on the balance sheet, with no debt.

The consensus revenue estimate for 2017 of $280.1 million (slightly above the guidance midpoint) represents growth of 49.2%.

Using the enterprise value, the stock trades at 8.5 times the forward revenue estimate and 6.3x the 2018 consensus revenue estimate of $375.7 million (representing growth of 34.1%).

MuleSoft went public in March 2017 at $17 and opened for trading the first day at $24.25. The post-IPO high is $29. The risk level is high, as short-term drawdown potential exceeds 10%.

Subscribe to Rob DeFrancesco's Tech-Stock Prospector here…

  By clicking submit, you agree to our privacy policy & terms of service.

Related Articles on TECHNOLOGY

Keyword Image
Top Picks 2019: Roku (ROKU)
01/21/2019 5:00 am EST

Looking at the Nasdaq wreckage, the question isn’t which mid-cap tech stock is growing faster ...

Keyword Image
Top Picks 2019: Ciena (CIEN)
01/17/2019 5:00 am EST

Ciena Corporation (CIEN) is a well-managed networker, and compared to its peers, and actually well d...