Today we're going to take a closer look at large-cap Consumer Discretionary company Airbnb, whose shares are currently trading at $141.54. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Airbnb Is Fairly Priced to Earnings but Overpriced Compared to Its Book Value:
Airbnb, Inc., together with its subsidiaries, operates a platform that enables hosts to offer stays and experiences to guests worldwide. 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, Airbnb has a trailing 12 month P/E ratio of 17.2 and a P/B ratio of 9.91.
When we divideAirbnb's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.91, 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.
Low Leverage Levels but a Negative Expected EPS Growth Rate:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue (MM) | $4,805 | $3,378 | $5,992 | $8,399 | $9,601 |
| Revenue Growth | n/a | -29.7% | 77.38% | 40.17% | 14.31% |
| Operating Margins | -9% | -106% | 7% | 24% | 28% |
| Net Margins | -14% | -136% | -6% | 23% | 56% |
| Net Income (MM) | -$674 | -$4,585 | -$352 | $1,897 | $5,465 |
| Net Interest Expense (MM) | $14 | $130 | -$304 | $25 | -$17 |
| Depreciation & Amort. (MM) | $114 | $126 | $138 | $81 | $41 |
| Diluted Shares (MM) | 261 | 284 | 616 | 680 | 676 |
| Free Cash Flow (MM) | $97 | -$777 | $2,288 | $3,405 | $4,246 |
| Capital Expenditures (MM) | $125 | $37 | $25 | $25 | $38 |
Airbnb has low leverage, growing revenues and decreasing reinvestment in the business, and irregular cash flows. However, the firm suffers from consistently negative margins with a positive growth rate and negative expected EPS Growth.
