Sea Ltd (SE, Financial), a prominent player in the cyclical retail industry, has demonstrated a remarkable stock performance in recent months. With a current market capitalization of $42.22 billion and a stock price of $73.51, Sea Ltd has experienced an 18.95% gain over the past week and an 11.90% gain over the past three months. The company's current GF Value stands at $79.82, indicating that it is fairly valued, compared to three months ago when it was considered modestly undervalued at a GF Value of $88.73.
Overview of Sea Ltd
Sea Ltd operates Southeast Asia's largest e-commerce platform, Shopee, and began as a gaming business with Garena. It has since expanded into financial services through SeaMoney. Shopee leads in gross merchandise value and transactions across eight core markets, with Indonesia being a significant contributor. Garena's Free Fire was the most downloaded game in January 2022, making up 74% of the gaming revenue in 2021. SeaMoney complements these segments by offering credit lending primarily.
Assessing Profitability
Sea Ltd's Profitability Rank is currently at 4/10. The company's Operating Margin stands at 1.24%, which is better than 36.23% of 1,115 companies in the same sector. Its Return on Equity (ROE) and Return on Assets (ROA) are 0.68% and 0.24% respectively, positioning Sea above a third of its industry peers. The Return on Invested Capital (ROIC) is 0.38%, also surpassing 33.99% of competitors. Despite these figures, Sea has only been profitable for one of the past ten years, which is a concern for potential investors.
Growth Trajectory
Sea Ltd's Growth Rank is impressive at 9/10. The company has seen a 33.80% three-year revenue growth rate per share, outperforming 90.03% of 1,053 companies. Over five years, this rate accelerates to 58.80%, better than 97.3% of 963 companies. Looking ahead, the estimated total revenue growth rate for the next three to five years is 14.84%, and the EPS growth rate is projected at a robust 77.52%, both figures ranking high against industry peers.
Significant Shareholders
Notable investors in Sea Ltd include Baillie Gifford (Trades, Portfolio), holding 34,268,428 shares (5.97%), Chase Coleman (Trades, Portfolio) with 14,996,068 shares (2.61%), and Frank Sands (Trades, Portfolio) who owns 9,328,229 shares (1.62%). These holdings indicate strong confidence from influential market players.
Competitive Landscape
Sea Ltd operates in a competitive environment with key players like eBay Inc (EBAY, Financial) with a market cap of $27.16 billion, Coupang Inc (CPNG, Financial) valued at $40.55 billion, and Chewy Inc (CHWY, Financial) at $10.89 billion. Despite the stiff competition, Sea's diversified business model and strong market presence in Southeast Asia provide it with a unique edge.
Conclusion
In conclusion, Sea Ltd's recent stock performance reflects its robust growth metrics and strategic market positioning within the cyclical retail industry. While its profitability has room for improvement, the company's significant growth and strong backing from notable shareholders suggest a promising outlook. Investors should keep an eye on how Sea navigates its competitive landscape and capitalizes on its diverse business operations.
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.
