Jim Cramer -- CyberArk Is a Great Business, but Its Valuation Is Too High

Although CyberArk reported 'fantastic' earnings results and the business is doing well, investors are 'rebelling' against stocks with P/E ratios this high, Cramer said.
By Bret Kenwell ,

Shares of CyberArk Software (CYBR) - Get Report are down 6.5% on Tuesday, despite what Jim Cramer called a "fantastic quarter" for the company. 

On CNBC's "Mad Dash" segment, Cramer, the co-manager of the Action Alerts PLUS portfolio, said the "business is really, really strong" and even though the stock is selling off, there is nothing actually wrong with CyberArk. 

The company beat on top and bottom line earnings expectations and even provided above-consensus guidance for both revenue and earnings for the fourth quarter. 


CyberArk Software CYBR data by YCharts

There's nothing wrong with the business. But there is something wrong with the stock: It's price-earnings ratio is huge. So while its business is doing well, investors are simply unwilling to pay such a high premium for the stock, Cramer explained. 

Although CyberArk is a profitable company in the fast-growing cybersecurity industry, investors are "rebelling" against stocks with valuations like this, he said. 

Investors should keep an eye on shares of CyberArk, as it may very well act as the "tale of the tape" for this group, Cramer concluded.

At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.

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