Long-established in the Software industry, Uber Technologies Inc (UBER, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.43%, juxtaposed with a three-month change of 37.54%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Uber Technologies Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 4/10
- Growth rank: 5/10
- GF Value rank: 3/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned Uber Technologies Inc a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Uber Technologies Inc's Business
Uber Technologies Inc, with a market cap of $130.06 billion and sales of $35.95 billion, operates at the forefront of the Software industry. The company boasts an operating margin of 0.88%, reflecting its ability to manage expenses relative to its revenue. Uber Technologies is a technology provider that matches riders with drivers, hungry people with restaurants and food delivery service providers, and shippers with carriers. Its on-demand technology platform could eventually be used for additional products and services, such as autonomous vehicles, delivery via drones, and Uber Elevate, which provides "aerial ride-sharing." Headquartered in San Francisco, Uber Technologies operates in over 63 countries and has over 131 million users that order rides or food at least once a month. Approximately 44% of its gross revenue comes from ridesharing and 34% from food delivery.
Financial Strength Breakdown
Uber Technologies Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0.5 positions it worse than 97.32% of 1,570 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
Additionally, the company's low cash-to-debt ratio at 0.47 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 4.51, which is above Joel Tillinghast's warning level of 4 and is worse than 82.59% of 1,539 companies in the Software industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Profitability Breakdown
Uber Technologies Inc's low Profitability rank can also raise warning signals. The company's Gross Margin has declined over the past five years, with figures showing a decrease from 53.38% in 2019 to 32.88% in 2023. This trend underscores the company's struggles to convert its revenue into profits, which is a critical aspect of financial health and sustainability.
Next Steps
Considering Uber Technologies Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has been a dominant player in its industry, these financial indicators suggest that investors should be cautious about the company's ability to sustain its historical performance levels. Value investors, in particular, may want to look for opportunities with stronger financial metrics and higher GF Scores.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
