Feb 10, 2022 - George Lucas
CLSK had a significant run up last year, followed by a rapid fall in share price. If we look at the macro environment there were several tech stocks, crypto miners, and market in general take a significant dive. At this point I think most of the correction is over, and looking at CLSK today, they are in a solid position.
We will look at recent performance, CLSK's earnings, it's performance vs peers, financial growth, and analyst ratings. At the end I'll summarize why I think CLSK can at least 2x from here
Just a brief summary of what's happened over the last year, if you have been following CLSK closely, you can probably jump to the earnings part of the analysis.
From a price performance standpoint, CleanSpark, Inc. has notched 30 day -13 %, 3 month -68.2 %, and 6 month -53.9 % in price performance. CLSK's stock shows a long term trending bearish trend with a stock price 30 day price performance of 0.09 %.Over a 52 week period, CLSK traded at $40.5 (high) & $5.47 (low) per share. CLSK is currently trading at77.48 % below the highest recorded price.
The recent price action can also be observed from a technical point of view.
The RSI score for CLSK is -100. You can see that it sits closer to oversold considering that a score of 30 or lower is oversold and a score of 70 or higher is overbought in the market. I usually don't trade purely on technical alone, but it is a good proxy to use when assess CLSK as an investment now.
Let's highlight a few key points from the earnings press release.
“Our strong financial results are evidence of the operating leverage of our business model,” said Gary A. Vecchiarelli, Chief Financial Officer. “Gross margins remain high at almost 80%, and much of that profitability translates to the bottom line as we saw $14.5m of net income and $24.1m of Adjusted EBITDA
These margins are significant, and CLSK maintains a strong balance sheet.
The Company increased its quarterly revenues to $41.2 million, an increase of $38.9 million or 17x from $2.3 million for the same prior year period.
Net income for the three months ended December 31, 2021 was $14.5m or $0.35 basic income per share compared to a loss of $(7.2) million or $(0.32) loss per share for the same prior year period
These results are extremely solid. They have set high expectations and guidance for the coming quarter, but based on their current trend I believe they are in a strong place to beat earnings again next quarter.
Let's talk about CLSK's price performance relative to its peers. Peers in the same industry notched -6.92% 30 day price change, -29.42 % 3 month, and -30.22 % 6 month.
CLSK performed worse than it's peers in this regard, purely based on price performance., Again price alone does not indicate whether CLSK is a good investment or not. It helps provide a bit of perspective though when looking at its peers in the industry.
CLSK's free cash flow is expected to grow by 120.49 % an increasing trend for the company's ability to generate free cash less non cash expenses. This is solid, and was references as part of the most recent earnings release.
Projecting forward, here are a few notable financial metrics to consider for CLSK
I believe that you shouldn't blindly follow analyst expectations and ratings for stocks. Typically, they are incentivised to upgrade or downgrade stocks for a variety of reasons. With that said, I like to use it as a proxy
Analysts have set CLSK's price target at $15.3 per share. This is essentially a 2x from the current price as of writing this analysis.
From a company perspective CLSK has earned an overall rating of 4/5 and a risk rating grade of A. CLSK earned a DCF valuation rating of 5/5, as well as a consensus return on equity of 3/5.
All of these factors provide a strong case for CLSK. We should see CLSK 2x in the next few months and there is no reason why it can't reach its highs from the previous year.