SNOW Stock Trades at a P/S of 13.13X: Should You Buy, Sell or Hold It?

Core Viewpoint - Snowflake (SNOW) shares are currently considered overvalued, with a Value Score of F, and a 12-month price/sales (P/S) ratio of 13.13X, significantly higher than its median of 12.39X and the industry average of 3.11X [1][3]. Financial Performance - In the trailing 12 months, SNOW shares have decreased by 16.9%, underperforming the Zacks Computer and Technology sector's growth of 27.4% and the industry's return of 32.3% [3]. - For Q4 of fiscal 2025, Snowflake anticipates product revenues between $906 million and$911 million, reflecting a year-over-year growth of 23% [15]. - The Zacks Consensus Estimate for Q4 fiscal 2025 revenues is $952.67 million, indicating a growth of 22.97$3.43 billion, a 29% increase year-over-year, with a non-GAAP product gross margin of 76% and a non-GAAP operating margin of 5% [16]. - The Zacks Consensus Estimate for fiscal 2025 revenues is $3.59 billion, suggesting a year-over-year growth of 28% [16]. - The consensus estimate for earnings per share (EPS) for fiscal 2025 is 69 cents, indicating a decrease of 29.59% year-over-year [16]. - Snowflake has beaten the Zacks Consensus Estimate for earnings in three of the last four quarters, with an average surprise of 35.39% [17]. Competitive Landscape - Snowflake faces intense competition from rivals like Databricks, along with rising pricing pressures and increasing GPU-related costs [3][19]. - The company is investing heavily in AI initiatives to counteract competitive pressures [3][12]. Strategic Partnerships - Snowflake has established a strong partner network, including major companies like Amazon, ServiceNow, Microsoft, and NVIDIA, which enhances its market position [10]. - Partnerships with ServiceNow and Microsoft are improving data interoperability and simplifying access to Snowflake's AI Data Cloud [11][12]. - The planned acquisition of Datavolo is expected to strengthen Snowflake's platform by enhancing support for both structured and unstructured data [14]. Innovation and Client Utilization - Innovations such as Iceberg, Hybrid tables, and Cortex Large Language Model are being utilized by industry leaders like Disney and Hyatt Hotels to optimize operations and enhance customer experiences [13].