Coupang shares fell by -2.8% during the day's evening session, and are now trading at a price of $15.36. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Coupang's P/B and P/E Ratios Are Higher Than Average:
Coupang, Inc., together with its subsidiaries owns and operates in e-commerce business through its mobile applications and Internet websites primarily in South Korea. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Coupang has a trailing 12 month P/E ratio of 64.0 and a P/B ratio of 9.37.
When we divideCoupang's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.7, 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.
Growing Revenues With Increasing Reinvestment in the Business:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue (MM) | $6,273 | $11,967 | $18,406 | $20,583 | $23,149 |
| Revenue Growth | n/a | 90.77% | 53.81% | 11.82% | 12.47% |
| Gross Margins | -10% | -4% | -8% | -1% | 2% |
| Operating Margins | -10% | -4% | -8% | 0% | 2% |
| Net Margins | -11% | -4% | -8% | 0% | 2% |
| Net Income (MM) | -$697 | -$463 | -$1,543 | -$92 | $429 |
| Net Interest Expense (MM) | $97 | $150 | $45 | $27 | $42 |
| Depreciation & Amort. (MM) | $71 | $128 | $201 | $231 | $255 |
| Earnings Per Share | -$39.48 | -$19.16 | -$1.08 | -$0.05 | $0.24 |
| EPS Growth | n/a | 51.47% | 94.36% | 95.37% | 580.0% |
| Diluted Shares (MM) | 19 | 29 | 1,424 | 1,765 | 1,857 |
| Free Cash Flow (MM) | -$530 | -$183 | -$1,084 | -$259 | $1,840 |
| Capital Expenditures (MM) | $218 | $485 | $674 | $824 | $783 |
| Long Term Debt (MM) | $0 | $970 | $520 | $803 | $834 |
| LT Debt to Equity | -0.0 | -0.24 | 0.24 | 0.33 | 0.28 |
Coupang has growing revenues and increasing reinvestment in the business, low leverage, and positive EPS growth. However, Coupang has slimmer gross margins than its peers, consistently negative margins with a stable trend, and an unconvincing cash flow history.
