monday.com may be overvalued with mixed growth prospects, but the 17 analysts following the company on average give it a buy rating. The analysts have set target prices ranging from $115 to $230 per share, for an average of $151.12. At today's price of $104.58, monday.com is trading -30.8% away from its average target price, suggesting there is an analyst consensus of strong upside potential.
monday.com Ltd., together with its subsidiaries, develops software applications in the United States, Europe, the Middle East, Africa, and internationally. Based in Tel Aviv, Israel, the mid-cap Technology company has 1,064 full time employees. monday.com has not offered a regular dividend during the last year.
Growing Revenues With Increasing Reinvestment in the Business:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | |
|---|---|---|---|
| Revenue (k) | $78,089 | $161,123 | $308,150 |
| Revenue Growth | n/a | 106.33% | 91.25% |
| Operating Margins | -118.5% | -93.4% | -40.9% |
| Operating Margins Growth | n/a | 21.18% | 56.21% |
| Net Margins | -117.32% | -94.46% | -41.96% |
| Net Margins Growth | n/a | 19.49% | 55.58% |
| Earnings Per Share | -$2.36 | -$3.95 | -$4.53 |
| EPS Growth | n/a | -67.37% | -14.68% |
| Free Cash Flow (k) | -$38,417 | -$42,656 | $2,597 |
| FCF Growth | n/a | -11.03% | 106.09% |
| Capital Expenditures (k) | -$1,767 | -$5,481 | -$13,758 |
monday.com does not have a meaningful trailing P/E ratio since its earnings per share are negative. Its forward EPS guidance is negative too, at -1.47. The average P/E ratio for the Technology sector is 26.5. monday.com is likely overvalued compared to the book value of its equity, since its P/B ratio of 7.3 is higher than the sector average of 5.57.
The analyst support for the stock comes from the company's strong revenue growth, coupled with significant re-investment into the business as demonstrated by the upwards capital expenditure trend. Margins too are improving, which points to strong growth potential. However, the consistent lack of profitability coupled with a crowded market in terms of competition probably means that monday.com is not going to be the next Amazon. Amazon is often cited as an example of an unprofitable company that executed on its vision and eventually provided payoffs for investors, but as Bezon himself admitted, they lacked any significant competition during the first seven years they built their business..
