Is Appian Stock a Bargain Buy Right Now?

The cloud stock has dropped 70% in the last three months

May 18, 2021 at 10:34 AM
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Appian Corporation (NASDAQ:APPN) is a cloud computing and enterprise software company. APPN sells a platform as a service for building enterprise software applications. It is focused on low-code development, business process management, and case management markets. Appian helps organizations build applications and workflows quickly, with a low-code automation platform. This morning, APPN is up 0.7% at $82.10.

APPN has increased about 54% over the past 12 months and is trading up nearly 87% from its 52-week low of $44.03. On the downside, however, shares of Appian stock have more than 49% so far in 2021. APPN is also down nearly 70% from its record high of $260.00, which was hit just four months ago, prior to the stock's selloff.

Checking in on earnings, Appian has outperformed Wall Street's earnings expectations on all four of its most recent earnings reports. While the company maintained a positive earnings per share (EPS) for its shareholders in the second and third quarter of 2020, Appian stock's EPS has dropped into negative territory over the past two quarters. Despite outperformance of analyst expectations in both quarters, earnings dropped to -$0.03 per share in the fourth quarter of 2020 and then dropped again to -$0.06 in the first quarter of 2021. At this time, analysts project that Appian will deliver a significant drop in EPS down to -$0.23 for the second quarter of 2021.

From a fundamental perspective, Appian Corporation is not growing revenue fast enough to warrant its $5.77 billion market cap. APPN's 2020 revenues came in at $304.5 million. It is quite possible that this revenue number is a major factor playing in Appian stock's major downward movement over the past few months. It would not be surprising to see Appian stock price drop even lower in the short-term in an attempt to reconcile and reflect a more reasonable value for the company.

Now seems like a great opportunity to weigh in on APPN's next move with options. The security's Schaeffer's Volatility Index (SVI) of 73% sits in the low 18th percentile of its annual range, indicating options players are now pricing in low volatility expectations.

 

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