Talend Stock: Tiny Tech Name Has Big Potential

Talend Stock
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Play Big Data Growth with Talend

France doesn’t only produce wine and cheese (which are, by the way, great). This beautiful country, known for its lush landscape, also produces advanced technologies across many facets.

Talend SA ADR (NASDAQ:TLND) is an intriguing small-cap big data solutions company based in France. The Talend stock price has already doubled from its 52-week low, and it is easily outperforming the S&P 500 and NASDAQ, with an 87% gain this year.

But, even with the massive advance, my view is that TLND stock has a lot of room to grow, given its small market cap of $1.2 billion and the major tailwinds in the big data segment, along with the company’s impressive growth metrics.

Talend develops a broad range of advanced big data and cloud integration applications for enterprises. The company focuses on information technology (IT), sales and marketing, finance, and human resources.

The big data solutions segment is highly competitive, but based on the company’s strong revenue growth, the future looks encouraging for TLND stock.

Fundamentals Support More Gains for TLND Stock

Talend’s revenues more than doubled from 2013 to 2016, and the consensus prediction is that the company will drive revenues another 40.2% to $148.6 million this year, which is above the almost-39.5% increase in 2016. For 2018, revenue growth is pegged at 30.3%. (Source: “Talend S.A. (TLND),” Yahoo! Finance, last accessed November 17, 2017.)

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The growth rates are impressive as Talend works on turning a profit sometime after 2019. The fact that the company’s losses have narrowed—and are expected to continue doing so—is bullish.

The record of higher gross margins from 2013 to 2016 is positive, suggesting that Talend is on the right path to achieving bottom line profitability.

Gross Margins

2013

69.8%

2014

73.01%
2015

75.0%

2016

75.5%

The debt risk is low for Talend stock. At the end of the third quarter, there was a mere $15,000 in debt and $95.4 million ($3.41 per share) in cash. The strong liquidity will allow Talend time to properly execute its growth strategy without fear of a cash crunch, something that often dogs emerging technology companies.

And, despite the losses, Talend has positive operating cash flow and levered free cash flow, which implies excellent cost management.

Analyst Take:

Technically, Talend stock has been on a nice run and is likely heading toward the next major technical break at $50.00.

An upward move in TLND stock is supported by the presence of a bullish golden cross pattern on the chart, which often points to additional upside moves.

TLND stock chart

Chart courtesy of StockCharts.com

There is major chart support at around $37.00 for Talend stock. If this previous base formation holds and the relative strength rises from the current neutral condition, I would expect TLND stock to handily retest the $42.00 resistance and stage a sustained breakout at the recent high of $45.07 set on November 10.