🛍️ SHOPIFY: ANALYSIS 🛍️
Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping, and securing working capital.
Last repot: 30/Sep/24
Based on a sample of the last year [3Q/24 TTM], its average margins have been:
- Gross margin: ≈ 51.6%
- Operating margin: ≈ 10.6%
- EBITDA margin: ≈ 12.7%
- Net margin: ≈ 10.1%
Pros:
- Zero net debt
- Improving in some margins such as EBITDA and Operating
- Advantage of market diversification (mainly B2B, so it is linked to wholesale trade)
Cons:
- Reduces of CAPEX
- Increases of OPEX
- High volatility linked to emerging markets (LATAM, Africa, Middle East and China)
Based on the last report, their normalized annual EPS was ≈ $1.07 USD and its last average ROIC [TTM] was ≈ 7.62%. If an average Forward PER 60. is set as a benchmark with an EPS intensity of ± 0.4199x, the potential forward spread target for the next 12 months could be:
- Optimistic: ≈ $104.02 USD
- Neutral: ≈ $64.22 USD
- Negative: ≈ $24.41 USD
At least, an EPS of $0.5085 USD is required for the next quarter, to keep the metrics.
In other hand, if an average Forward EV/EBITDA 75 is set, an EBITDA increases of ± 3%, a Net Debt increases of 00%, a Dividends increase of 0% and Shares Outstanding increases of ± 0.69%, the potencial spread price target for the next 12 months could be:
- Optimistic: ≈ $73.17 USD
- Neutral: ≈ $71.44 USD
- Negative: ≈ $69.69 USD
a possible spread for the next 12 months might be at:
- P/S 15: ≈ $95.33 USD
- P/S 10: ≈ $63.55 USD
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J. Joel Padilla
Copyright: Joel Padilla 2024
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