Globant Rallies To New Highs After Second-Stage Base Breakout

IT specialist Globant NYSE: GLOB advanced 30.64% in the past month as it zipped past a buy point above $323.79 and just kept rallying. The stock closed Tuesday at $354.44, up $6.51, or 1.87% in the session.

Luxembourg-based Globant develops platforms that it calls “digital journeys.” In its own words, “We are a digitally native company where innovation, design and engineering meet scale. We use the latest technologies in the digital and cognitive field to empower organizations in every aspect.”

It also describes itself as such: “We are a digitally native company that helps organizations reinvent themselves to create a way forward and unleash their potential. We are the place where innovation, design and engineering meet scale.”

Clients include the London metropolitan police, SmileDirect Club, Rockwell Automation, Autodesk, Santander and Electronic Arts. 

Although it went public back in 2014, that’s still in the window of time when companies tend to notch their biggest price advances after going public. In the past year, Globant is up 75.2%. Its year-to-date advance is 62.88%. 

The company is expected to report earnings on or around November 18. Wall Street expects earnings of $0.71 per share on revenue of $327.44 million. Both would be gains over the year-earlier quarter.

According to MarketBeat earnings data, Globant topped earnings and revenue estimates in each of the past five quarters. 

Accelerating Earnings And Revenue Growth

Globant’s revenue growth accelerated in the past four quarters, increasing from 16% to 67%. Earnings growth accelerated from 9% to 96% in the past two quarters.

The company has been profitable every year since going public and has managed to increase earnings every year. Even in 2020, when growth rates slowed in the second and third quarters, the company topped year-earlier earnings.

For the full year, analysts expect Globant to earn $3.50 per share, up 50% over last year. In 2022, that’s seen growing another 28% to $4.48 per share. 

Although those estimates were revised lower recently, it’s significant that analysts still expect double-digit earnings growth in 2022. Many companies’ growth forecasts are currently pegged in the single digits for next year, following large year-over-year gains in 2021, 

Last month, the company said it had become carbon neutral as a new step in its commitment to become a net-zero company. According to a news release, Globant started its Net-Zero Roadmap in 2020 when it moved to 100% renewable electricity, buying renewable energy certificates that ensured the use of renewable sources in all its operations.

"At Globant we have always been aware of our environmental footprint and reaching carbon neutrality is another important step in our Race to Zero journey," said co-founder and CEO Martín Migoya in a statement. "Our efforts to become a net-zero company are aligned to our purpose of making the world a better place, one step at a time and being part of the solution."

Bolstering Its Position In Blockchain

The company is also eyeing other timely initiatives. In early October, it acquired Atix Labs  to strengthen and empower its blockchain and crypto-related solutions and products. Globant said the agreement would allow it to offer cutting-edge solutions for clients on decentralized finance, smart contracts and asset tokenization while expanding the offering of its Blockchain Studio.

According to Globant, “This acquisition helps Globant to expand its offering in the blockchain market, which is expected to grow 10 times by 2025, according to industry analysts.” 

It will also enable the company to continue delivering novel and disruptive solutions to its clients in different business verticals, such as media & entertainment, finance, real estate, healthcare, finance, supply chain, and other verticals. 

Financial terms were not disclosed. 

Following the stock’s recent breakout from an eight-week second stage base, Globant is trading at all-time highs. It’s currently up 6.5% from its buy point. That’s a little too high to chase. A better strategy is to wait for a pullback to a key moving average, where the stock gets support. That would show you that some investors were taking small profits before potentially setting up the stock for further gains.