雅虎香港財經 Should You Buy AppLovin (APP) Stock Ahead of Q1 Earnings?
AppLovin Corporation APP will report its first-quarter 2024 results on May 8, after the bell.
The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the past four trailing quarters and matched once, delivering an earnings surprise of 26.5% on average.
Let’s check out how APP is currently doing.
Stock Performance & Valuation
The stock has gained a massive 82% year to date, significantly outperforming the 8% rally of the industry it belongs to. APP is trading at a forward sales multiple of 16.93X, above its median of 14.38X over the last five years and the industry’s 6.91X.
On the basis of EV-to-EBITDA, APP is currently trading at 23.95X compared with the industry’s 59.74X. If we look at the Price/Earnings ratio, APP shares are currently trading at 27.08X forward earnings, well below the industry’s 42.88X.
AppLovin Corporation Price
AppLovin Corporation price | AppLovin Corporation Quote
Sales and Margin Performance
In 2023, APP experienced notable success, with total revenues surging 17% year over year. This growth was primarily propelled by the company's commitment to execution and innovation, resulting in a remarkable 76% increase in revenue in the Software Platform business. APP introduced its advanced AXON 2.0 technology, enhanced gaming studios and ventured into new initiatives aimed at fueling market expansion and long-term growth. The company achieved a 41% year-over-year increase in adjusted EBITDA with adjusted EBITDA margin expanding 800 basis points year over year in 2023.
Liquidity
APP’s current ratio (a measure of liquidity) was at 1.71 at the end of the fourth quarter of 2023, higher than the prior quarter’s 1.62. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
Sales and EPS Growth Prospects
The Zacks Consensus Estimate for APP’s 2024 sales and EPS implies year-over-year growth of 24% and 157%, respectively. The estimate for EPS has moved north by 1.6% over the past 30 days.
To Conclude
APP trades at a discount relative to its industry based on EV-to-EBITDA and P/E. The company’s liquidity position based on the current ratio remains healthy. APP is expected to continue its top and bottom-line growth momentum thanks to its commitment to execution, and innovation and initiatives to fuel market expansion and long-term growth.
However, since the stock has risen a whopping 82% year to date, it may undergo a correction soon. Hence, it may not be a bad idea to wait for this fundamentally strong stock to undergo some correction and offer a better entry point rather than rushing to purchase the stock before earnings.
APP currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshots of Some Service Stocks
Omnicom OMC reported impressive first-quarter 2024 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.
OMC’s earnings of $1.67 per share beat the consensus estimate by 9.9% and increased 7.1% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 1.6% and increased 5.4% year over year.
Equifax EFX reported mixed first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.
EFX’s adjusted earnings were $1.5 per share, ahead of the Zacks Consensus Estimate by 4.2% and up 4.9% from the year-ago quarter. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but increased 6.7% from the year-ago quarter.
ManpowerGroup MAN reported mixed first-quarter 2024 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Quarterly adjusted earnings of 94 cents per share surpassed the consensus mark by 4.4% but declined 41.6% year over year. Revenues of $4.4 billion lagged the consensus mark by 0.6% and fell 7% year over year.
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ManpowerGroup Inc. (MAN) : Free Stock Analysis Report
Omnicom Group Inc. (OMC) : Free Stock Analysis Report
Equifax, Inc. (EFX) : Free Stock Analysis Report
AppLovin Corporation (APP) : Free Stock Analysis Report
