It's been a great evening session for Carvana Co. investors, who saw their shares rise 1.2% to a price of $32.01 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
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Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of None and an average price to book (P/B) ratio of None. In contrast, Carvana Co. has a trailing 12 month P/E ratio of -7.7 and a P/B ratio of 10.76.
When we divideCarvana Co.'s P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.88, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
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Year 2018 2019 2020 2021 \
Revenue (MM) $1,955 $3,940 $5,587 $12,814
Gross Margins 10% 13% 14% 15%
Year 2022 2023
Revenue (MM) $13,604 $11,184
Gross Margins 9% 14%
