We've been asking ourselves recently if the market has placed a fair valuation on Futu. Let's dive into some of the fundamental values of this Large-Cap Finance company to determine if there might be an opportunity here for value-minded investors.
an Exceptionally Low P/B Ratio but Priced at a Premium:
Futu Holdings Limited provides digitalized securities brokerage and wealth management product distribution service in Hong Kong and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 20.04 and an average price to book (P/B) ratio of 1.86. In contrast, Futu has a trailing 12 month P/E ratio of 20.6 and a P/B ratio of 0.47.
Futu has moved 62.0% over the last year compared to 24.2% for the S&P 500 — a difference of 37.7%. Futu has a 52 week high of $130.5 and a 52 week low of $43.61.
Positive Cash Flows:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue (k) | $136,282 | $427,015 | $912,267 | $975,969 | $1,281,340 |
| Interest Income (k) | -$242 | $642 | $1,265 | -$704 | $4,384 |
| Operating Margins | 17% | 44% | 45% | 44% | 50% |
| Net Margins | 16% | 40% | 39% | 38% | 43% |
| Net Income (k) | $21,267 | $170,960 | $360,302 | $375,178 | $548,140 |
| Depreciation & Amort. (k) | $2,124 | $3,512 | $4,672 | $7,013 | $7,790 |
| Diluted Shares (k) | 9,178,974 | 1,050,143 | 1,219,673 | 1,151,022 | 1,119,654 |
| Earnings Per Share | $0.16 | $1.26 | $2.3 | $2.54 | $3.82 |
| EPS Growth | n/a | 687.5% | 82.54% | 10.43% | 50.39% |
| Free Cash Flow (k) | $237,641 | $2,632,633 | $761,770 | $433,814 | -$821,308 |
| CAPEX (k) | $15,193 | $5,759 | $9,033 | $11,603 | $9,956 |
Futu has strong operating margins with a positive growth rate, exceptional EPS growth, and rapidly growing revenues and decreasing reinvestment in the business. However, the firm has positive cash flows.
