Why Samsara Stock Sank Today

Samsara (NYSE: IOT) stock saw a substantial valuation pullback in Friday's trading. The company's share price closed out the daily session down 4.6% and had been down as much as 12% earlier in the day's trading.

Despite a trading backdrop that saw the S&P 500 rise 1% in the session, the quarterly report that Samsara published yesterday prompted a big pullback for the stock. The company actually delivered first-quarter sales and earnings that beat the market's expectations, but its forward guidance underwhelmed the market.

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Samsara sinks despite fiscal Q1 beats

In fiscal Q1, which ended May 3, Samsara posted non-GAAP (adjusted) earnings per share of $0.11 on sales of $366.9 million. The performance came in significantly better than the average Wall Street analyst estimate, which had called for per-share earnings of $0.06 on revenue of $351.44 million. Sales were up roughly 31% year over year in the period, and the adjusted earnings per share rose roughly 267% compared to the prior-year period.

What's next for Samsara?

For the full-year period, Samsara is guiding for sales to come in between $1.547 billion and $1.555 billion. If the business were to hit the midpoint of that guidance range, it would mean delivering annual sales growth of roughly 24.5%. Meanwhile, adjusted earnings per share are projected to be between $0.39 per share and $0.41 per share -- good for growth of roughly 54% at the midpoint of the target range.

The results generally showed that the business is having success with its pitch to integrate artificial intelligence (AI) technologies with Internet of Things tracking and automation solutions, but the stock still pulled back after the earnings release. With the company still valued at roughly 17 times expected sales and 132 times expected adjusted earnings, shares could continue to be volatile in the near term -- but the company's Q1 report and guidance were hardly terrible.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Samsara. The Motley Fool has a disclosure policy.