It hasn't been a great day for Monday.com investors, who have watched their shares sink by -3.5% to a price of $93.58. Some of you might be wondering it it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Monday.com Ltd., together with its subsidiaries, develops software applications in the United States, Europe, the Middle East, Africa, and internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 26.5 and an average price to book (P/B) ratio of 5.57. In contrast, Monday.com has a trailing 12 month P/E ratio of -22.4 and a P/B ratio of 6.6.
P/B ratios are calculated by dividing the company's market value by its book value. The book value refers to all of the company's tangible assets minus its liabilities -- meaning that intangibles such as intellectual property, brand name, and good will are not taken into account. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
Monday.com has moved -72.6% over the last year compared to -17.0% for the S&P 500 -- a difference of -55.7%. Monday.com has a 52 week high of $450 and a 52 week low of $85.75. While the company reports gross margins consistently in excess of 80%, its operating margins have been negative for the last three years -- a definite red flag for any conservative investor.
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