Coupan Co., Ltd. (CPNG) has been one of the most searched stocks on Zacks.com recently, so it is advisable to take a look at a few facts that could drive this stock’s performance in the near term.
Shares of this company have returned -0.8% over the past month versus the +4.1% movement of the Zacks S&P 500 composite index. The Zacks Internet – Commerce industry, which Coupang belongs to, has gained 7.5% in that same period.The big question here is, where is this stock headed in the near term?
Media announcements or rumors of significant changes in a company’s business outlook will usually make the stock “trend” and cause immediate price movements, but there are always some fundamental facts that ultimately drive the buy-and-hold decision.
Earnings forecast revision
At Zacks, we prioritize evaluating the changes in a company’s earnings estimates over other factors because we believe the fair value of a stock is determined by the present value of its future earnings stream.
It essentially looks at how sell-side analysts covering the stock are revising their earnings forecasts to reflect the impact of the latest business trends. As a company’s earnings forecasts rise, so does the fair value of its stock. If the fair value is higher than the current market price, investors will be interested in buying the stock, driving the share price up. This is why empirical studies have shown a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
For the current quarter, Coupang is projected to post earnings of $0.05 per share, which would represent a -37.5% change from the year-ago period. The Zacks Consensus Estimate has changed -81.8% within the past 30 days.
The consensus revenue estimate for the current fiscal year is $0.03, indicating a change of -88.5% year over year. Over the past 30 days, this estimate has changed -80.8%.
Looking at the next fiscal year, the consensus earnings estimate is $0.66, which represents a +2,105.6% change from what Coupang was expected to report a year ago. Over the past month, estimates have changed -2.9%.
The Zacks Rank, our proprietary stock rating tool with a strong outside-audited track record, effectively harnesses the power of earnings estimate revisions to provide a more certainty view into near-term stock price direction. The magnitude of the recent change in consensus estimates, along with three other factors related to earnings estimates, have earned Coupang a Zacks Rank #4 (Sell).
The chart below shows the evolution of the company’s consensus EPS estimates over the next 12 months.
12 Month EPS
Revenue Growth Forecast
Revenue growth is arguably the best indicator of a company’s financial health, but if a company can’t grow its revenue, then nothing happens. After all, it’s nearly impossible for a company to grow its revenue over the long term without growing its revenue. Therefore, it’s important to know a company’s revenue growth potential.
For Coupang, the consensus revenue estimate for the current quarter is $7.33 billion, indicating a change of +25.6% year-over-year. For the current and next fiscal years, estimates of $30.46 billion and $36.08 billion indicate changes of +24.9% and +18.4%, respectively.
Last reported results and surprise history
Coupang reported revenue of $7.11 billion for the most recent quarter, up 22.6% from the same period last year. EPS was $0.05 for the same period last year, compared to $0.05 in the same period last year.
Compared to the Zacks Consensus Estimate of $6.64 billion, reported revenues represented a surprise of +7.1%. EPS surprise was -16.67%.
Over the last four quarters, Coupang has surpassed consensus EPS estimates two times, and the company also topped consensus revenue estimates each time during that period.
evaluation
No investment decision can be efficient without taking into account stock valuation. To predict the future price movement of a stock, it is important to determine whether the current price properly reflects the intrinsic value of the underlying business and the company’s growth prospects.
Comparing the current value of a company’s valuation multiples such as Price to Earnings (P/E), Price to Sales (P/S), Price to Cash Flow (P/CF) with its historical values ​​helps in identifying whether the stock is fairly valued, overvalued or undervalued. Also, comparing a company with its peers based on these parameters gives a good idea of ​​how reasonably priced its stock is.
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional criteria to rate stocks from A to F (with An being better than B, B being better than C, etc.), which can be very helpful in identifying whether stocks are overvalued, fairly valued or temporarily undervalued.
In this regard, Coupang is rated a C, indicating that it is trading in line with its peers. Click here to see the values ​​of the valuation metrics that drove this rating.
Conclusion
The facts discussed here, and many other information on Zacks.com, may help you decide whether the market buzz surrounding Coupang is worth following, although its Zacks Rank #4 suggests it may underperform the overall market in the near term.
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Coupang, Inc. (CPNG) : Free Stock Analysis Report
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