We've been asking ourselves recently if the market has placed a fair valuation on Bumble. Let's dive into some of the fundamental values of this mid-cap Technology company to determine if there might be an opportunity here for value-minded investors.
Bumble Has an Attractive P/B Ratio but a Worrisome P/E Ratio:
Bumble Inc. provides online dating and social networking platforms in North America, Europe, internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 35.0 and an average price to book (P/B) ratio of 7.92. In contrast, Bumble has a trailing 12 month P/E ratio of -21.7 and a P/B ratio of 1.23.
When we divide Bumble's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -1.52. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
The Business Has Negative Margins on Average:
| 2019 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|
| Revenue (MM) | $489 | $761 | $904 | $1,020 |
| Revenue Growth | n/a | 55.62% | 18.74% | 12.87% |
| Gross Margins | 19.07% | -17.7% | -11.38% | -8.55% |
| Operating Margins | 19% | -18% | -11% | -9% |
| Net Margins | 18% | 41% | -4% | -4% |
| Net Income (MM) | $86 | $310 | -$34 | -$40 |
| Net Interest Expense (MM) | $0 | $3 | $16 | $12 |
| Depreciation & Amort. (MM) | $7 | $107 | $90 | $67 |
| Free Cash Flow (MM) | $101 | $105 | $133 | $170 |
Bumble has growing revenues and no capital expenditures, healthy debt levels, and irregular cash flows. However, the firm has consistently negative margins with a negative growth trend. Finally, we note that Bumble has positive expected EPS Growth.
