Uber Technologies (Uber – (Free Report) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
Over the past month, the ride-hailing company's stock has increased by +18.2%. This compares to a +5% change in the Zacks S&P 500 Composite Index. The Zacks Internet Services industry, which includes Uber, declined 0.5% during this period. The key question here is: What is the future direction of the stock price?
While media releases and rumors about significant changes in a company's business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Uber is expected to post earnings of $0.20 per share, which would represent a +350% change from the year-ago period. The Zacks Consensus Estimate has changed +27.9% over the past 30 days.
The consensus earnings estimate for the current fiscal year of $1.16 represents a +33.3% change from the prior year. Over the past 30 days, this estimate has changed by +11.7%.
Next year's consensus earnings estimate of $1.96 represents a +68.3% change from the earnings Uber was expected to report a year ago. Over the past month, the forecast has changed by +13.3%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent change in consensus estimates and three other factors related to earnings expectations give Uber a Zacks Rank of #2 (Buy).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's profit growth is the best indicator of its financial health, but if it's not profitable, nothing will happen. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For Uber, the current quarter's consensus revenue estimate of $10.03 billion represents a year-over-year change of +13.7%. The current and next fiscal year estimates of $43.17 billion and $50.34 billion represent changes of +15.8% and +16.6%, respectively.
Last reported results and surprising details
Uber reported revenue of $9.94 billion in its last reported quarter. This represents a +15.4% year-over-year change. EPS for the same period was $0.66, compared to $0.29 a year ago.
The reported earnings represent a surprise of +1.94% when compared to the Zacks Consensus Estimate of $9.75 billion. EPS was an astonishing +340%.
Over the last four quarters, Uber has surpassed consensus EPS estimates three times. The company surpassed consensus revenue estimates two times during the period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
The present value of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters can help you see if it is overvalued, overvalued or undervalued, but how reasonable its stock is You can get to know better.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) categorizes stocks into five groups, ranging from A to F, with A ranging from B to F. B is better than C, and so on), and can help identify whether a stock is overvalued, fairly valued, or temporarily undervalued. Masu.
Uber receives a D rating on this score, indicating that it trades at a premium compared to its peers. Click here to see the values ​​of some of the metrics that determined this grade.
conclusion
The facts discussed here, and many others on Zacks.com, may help you decide whether the market buzz surrounding Uber is worth paying attention to. However, the company's Zacks Rank #2 suggests it has the potential to outperform the broader market in the near term.
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