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Today we are looking at DoorDash, Inc. (NYSE: DASH), to determine if you should buy DASH stock. We will look at a variety of information to arrive at a DASH stock, including: forecast DASH financial ratios, analyst ratings, and a DASH comparable analysis.
What Does DASH Do?
DoorDash, Inc. operates a logistics platform that connects merchants, consumers, and dashers in the United States and internationally. It operates DoorDash marketplace, which provides an array of services that enable merchants to solve mission-critical challenges, such as customer acquisition, delivery, insights and analytics, merchandising, payment processing, and customer support; and offers DoorDash Drive, a white-label logistics service.
DASH Stock Forecast and Analysis
DoorDash, Inc. Competition and Comparables
In order to undergo a comparable analysis (to determine DASH stocks value), we need to first outline who DASH’s competitors are.
These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to DASH, and have a market cap similar to DASH (if possible).
By keeping this in mind, I found the following list of companies to be some of DASH stocks closest competitors:
TWTR, PINS, BCE, RBLX, SPOT, ORAN, AMOV, AMX, CHT, RELX
DASH Stock News and Information
Analysis of DASH Earnings, Stock Performance and Financial Ratios
DASH Earnings (Yearly):
- DASH Revenues: In FY 2021, DASH experienced a yearly increase in revenues of $2B (or 69.37%) resulting in a total revenue figure of $4.89B.
- DASH Cost of Revenues: In FY 2021, DASH experienced a yearly increase in their cost of revenues of $970M (70.91%), resulting in a total revenue figure of $2.34B. Since the increase (of 70.91%), in DASH’s cost of revenue was greater (by 1.54%) than the increase (of 69.37%) in DASH’s revenues, we should expect that DASH experienced an decrease in their FY gross profits.
- DASH Gross Profit: In FY 2021, DASH experienced a yearly increase in their gross profit of $1.03B (or 67.98%) resulting in a total gross profit of $2.55B. This decrease is not consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY.
- DASH EBITDA: In FY 2021, DASH experienced a yearly increase in their EBITDA of $13,000,000 (or 4.25%) resulting in a total EBITDA of $-293M. This increase (of 4.25%) stems from the fact that DASH experienced a increase in their gross profits of 67.98% (as we saw in the previous bullet point).
- DASH Net Income: In FY 2021, DASH experienced a yearly decrease in their net income of -$7,000,000 (or -1.52%) resulting in a total net income of $-468M.
- DASH EPS: Despite DASH’s net income decreasing by -$7,000,000, DASH’s EPS actually increased (by $6) from $-7.39 in FY 2020 to $-1.39 in FY 2021
Overall it seems as though DASH earnings for 2021 were rather good as they were able to lessen their negative EPS, which is a sign of good things to come. However, has this trend continues into more recent times? Let’s find out by looking at DASH earnings for Q1 2022.
DASH Earnings (Quarterly):
- DASH Revenues: In Q1 2022, DASH experienced a quarterly increase in revenues of $156M (or 12%) resulting in a total revenue figure of $1.46B.
- DASH Cost of Revenues: In Q1 2022, DASH experienced a quarterly increase in their cost of revenues of $128M (20.16%), resulting in a total revenue figure of $763M. Since the increase (of 20.16%), in DASH’s cost of revenue was greater (by 8.16%) than the increase (of 12%) in DASH’s revenues, we should expect that DASH experienced an decrease in their Q1 gross profits.
- DASH Gross Profit: In Q1 2022, DASH experienced a quarterly increase in their gross profit of $28M (or 4.21%) resulting in a total gross profit of $693M. This decrease is not consistent with our conclusion from the comparison of revenues and cost of revenues between Q1 2022 and Q4 2021.
- DASH EBITDA: In Q1 2022, DASH experienced a quarterly decrease in their EBITDA of $4,000,000 (or -3.88%) resulting in a total EBITDA of $-107M.
- DASH Net Income: In Q1 2022, DASH experienced a quarterly decrease in their net income of -$12,000,000 (or -7.74%) resulting in a total net income of $-167M.
- DASH EPS: As a result of DASH’s decrease in net income of -$12,000,000, DASH’s EPS also decreased (by $-0.03) from $-0.45 in Q4 2021 to $-0.48 in Q1 2022
Overall, it seems as though DASH had a poor financial performance (due to EPS decreasing by $0.03) as many of their financial metrics shrunk, most notably their EPS (by $0.03), as well as their net income (by -$12,000,000), and other metrics (as you can tell from the above bullet points).
However, DASH stock missed their EPS estimate by -$0.07 (or -17.07%), as they reported an EPS of $-0.48 for the quarter (compared to their estimated EPS of $-0.41). This contradicts the trend that DASH was headed in the right direction.
Is DASH Share Dilution an Issue?
As part of their Q1 2022 earnings release, DASH stated that they currently have 349.22M Shares Outstanding (weighted average), which is up 4.75M shares (from 344.47M shares outstanding in Q4 2021). This represents a dilution of 1% which is not a lot, however, it is still something to be cognizant of as an investor.
Latest DASH Stock Analyst Ratings
Here is the current analyst rating distribution for DASH. In total there are 37 DASH stock analyst ratings.
Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine if DASH stock is a buy or sell
DASH Stock Rating and Forecast
Currently, we have 2 financial ratings that help investors get a general idea of a company’s valuation. These 2 metrics include ROE, and P/E, which are very common in the investing/valuation climate.
Secondly, DASH stock has an ROE rating of 3 — Neutral. DASH’s current ROE is -11.29%, which justifies their rank of 3 — Neutral. ROE shows us how good (or bad) a company is at using their shareholders funds to generate money (returns). ROE is most useful when compared against the industry average, which is currently 22.79%. In my opinion since DASH ROE is both negative, and well under their peers’ average, I think that their ROE Rating should be closer to a 2 — Weak, or a 1 — Very Weak.
Lastly, DASH stock has a P/E rating of 1 — Very Weak. DASH stock price to earnings ratio is currently -46.53 which justifies their rank of 1 — Very Weak. Price to Earnings is the most commonly found financial metric and is best used when comparing a company’s p/e to the industry average. DASH operates in the Internet Content & Information industry, which currently has an average P/E of 53.01. This rating of — Very Weak makes a lot of sense.
Overall, based on the 2 previously mentioned fields, DASH stock has been given a comprehensive rating of 2 — Weak . This rating implies that they might run into some financial hardships if they are not careful.
DASH Stock Price Prediction and Valuation
The Latest DASH Ratings
As we know, DASH stock has been given an overall rating of 2 — Weak. This implies that DASH is perhaps not sound fundamentally and is not a good candidate for being “undervalued”. With this in mind, let’s proceed.
DASH Price Forecast Using Comparable Analysis
- Price to Book (P/B): DASH’s current P/B ratio is 5.25, compared to the average P/B ratio of DASH’s peers being 4.75. This implies that DASH is overvalued and their share price should change by a factor of -9.48% to be at fair value (based on DASH’s P/B compared to the P/B of their peers).
- Price to Equity (P/E): DASH stock P/E ratio is currently -46.53, compared to the average P/E ratio of DASH’s peers being 53.01. This implies that DASH is overvalued and their share price should change by a factor of -213.92% to be at fair value (based on DASH’s P/E compared to the P/E of their peers).
Overall, DASH stock is overvalued and needs to experience a change in stock price of (an average of) -111.7% to be considered “at fair value”.
Since the P/E valuation is inflated (due to unusual financial ratios) I think it is best to use DASH’s P/B comparable to determine their underlying value. The P/E comparable just confirms the fact that DASH is undervalued rather than being a determinant of value.
Is DASH Stock a Buy or Sell?
Overall, due to the overall stock rating of (Based off of ROE and P/E), as well as the fact that a comparable analysis (P/B) found that 2 — Weak DASH was overvalued and need to experience a price change of -9.48% in order to be at their fair value, I have concluded the following:
I would consider entering into a bearish position (if any) into DASH as the DASH Stock Forecast that we found determined that their stock was 10% overvalued.
Originally published at https://utradea.com.
