We've been asking ourselves recently if the market has placed a fair valuation on Uber Technologies. Let's dive into some of the fundamental values of this large-cap Technology company to determine if there might be an opportunity here for value-minded investors.
The Market May Be Overvaluing Uber Technologies's Earnings and Assets:
Uber Technologies, Inc. develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia excluding China and Southeast Asia. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Uber Technologies has a trailing 12 month P/E ratio of -27.3 and a P/B ratio of 10.8.
Uber Technologies's PEG ratio is 8.26, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Business Has Negative Margins on Average:
| 2020-03-02 | 2021-03-01 | 2022-02-24 | 2023-02-21 | |
|---|---|---|---|---|
| Revenue (MM) | $13,000 | $11,139 | $17,455 | $31,877 |
| Gross Margins | 53.4% | 53.7% | 46.4% | 38.3% |
| Operating Margins | -66.1% | -43.7% | -22.0% | -5.8% |
| Net Margins | -65.43% | -60.76% | -2.84% | -28.68% |
| Net Income (MM) | -$8,506 | -$6,768 | -$496 | -$9,141 |
| Net Interest Expense (MM) | -$559 | -$458 | -$483 | -$565 |
| Depreciation & Amort. (MM) | -$472 | -$575 | -$902 | -$947 |
| Earnings Per Share | -$6.81 | -$3.86 | -$0.26 | -$1.68 |
| EPS Growth | n/a | 43.32% | 93.26% | -546.15% |
| Diluted Shares (MM) | 1,248 | 1,753 | 1,899 | 2,039 |
| Free Cash Flow (MM) | -$3,733 | -$2,129 | -$147 | $894 |
| Capital Expenditures (MM) | -$588 | -$616 | -$298 | -$252 |
| Net Current Assets (MM) | -$2,653 | -$9,616 | -$11,727 | -$12,567 |
| Current Ratio | 2.47 | 1.44 | 1.3 | 1.25 |
| Long Term Debt (MM) | $8,004 | $9,783 | $11,822 | $12,293 |
| LT Debt to Equity | 0.53 | 0.71 | 0.77 | 1.45 |
Uber Technologies has a pattern of improving cash flows, growing revenues and decreasing reinvestment in the business, and a strong EPS growth trend. However, the firm suffers from slimmer gross margins than its peers and consistently negative margins with a positive growth rate. Finally, we note that Uber Technologies has just enough current assets to cover current liabilities and an average amount of debt.
