Uber (NYSE: UBER) is one of the major laggards today, down 5.5% at the opening bell after investors were unsatisfied with the company’s first quarter performance.
Analysts were expecting another quarter profit, keeping the positive momentum going after Uber’s first full year of profitability last year, but that was not the case.
Uber’s loss was more to do with legal settlements and investment write downs than core business functions. What long term investors should be focused on was the top line growth, revenue growing 15% year-over year and $1.4 billion in free cash flow. Also the core business is still thriving with trips increasing 21% from the previous year.
Uber Stock Score
24/7 Wall Street scores stocks in three key areas: fundamentals, valuation and Wall Street expectations. The score compares stocks to peers in their industry coupled with price targets and Wall Street recommendations. Despite today’s drop in price, here is what investors should focus on in determining to buy, sell or hold Uber stock.
Fundamentals
| Metric | Stats | Checklist |
| Revenue Growth (5 Year) | 29% | — |
| EPS Growth (5 Year) | — | — |
| 5 Year Gross Margins (Median) | 48.54% | Fail |
| ROE (5 Year Median) | — | — |
| Debt to Equity | 84% | Fail |
| Free Cash Flow Growth (5 Year Growth) | — | — |
| Long Term Debt | $9,459.00 | Pass |
| 10 Year Dividend Per Share Growth | — | — |
As a newer member to the stock market, Ubers long term fundamental analysis picture is not painted yet but the company demonstrates strengths in certain areas, such as manageable long-term debt and improving free cash flow and very healthy year-over-year revenue growth.
However it does carry more debt than is average in the industry but its growing net income should lesson the worry for investors as Uber can manage paying its debts.
Wall Steet’s Take
| Price Target | $86.92 | Pass |
| Consensus Recommendation | 1.46 | Pass |
Wall Street analysts remain optimistic about Uber’s future prospects. The company’s price target of $86.92 represents a 23.42% premium over the current price of $70.43, indicating bullish sentiment among analysts. Furthermore, the consensus Wall Street recommendation stands at 1.46, reflecting a positive outlook on the stock’s performance. In fact, of the 47 analysts covering Uber, 41 of them rate Uber as “outperform” or “buy”.
Value Metrics
| Earnings Yield | 1.22% | Fail |
| Dividend Yield | 0.00% | Fail |
| Free Cash Flow Yield | 2.29% | Pass |
| EBITDA Margin | 10.13% | Pass |
| Return On Invested Capital (5 Year) | -35% | Pass |
Analyzing Uber’s value metrics are pretty on par for a fast growing company like uber. The company’s free cash flow yield of 2.29% surpasses industry averages, its earnings and dividend yields should not be a concern for a company at this stage of its lifecycle.
However, Uber exhibits a competitive EBITDA margin of 10.13%, suggesting efficient operational performance. Additionally, despite a negative return on invested capital (ROIC) of -35.12%, the company’s ability to outperform industry averages in this metric suggests management’s commitment to allocating capital is above industry standards.
Bottomline Uber looks strong and investors should look for drops in price like today for discount entry points into the stock.
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