1 Stock That Has No Business Being in Your Portfolio

In the most recent quarter, the financial performance of the company was weak. The lawsuits could make investors nervous. The stock has lost more than 75% of its value this year and may continue to lose. It might be a good idea to avoid Pton now. Continue reading...

shutterstock.com - StockNews

The company operates an interactive fitness platform in North America. It has connected fitness products that can be used to stream live and on demand classes. There are more than 6 million members.

Pton and UnitedHealthcare expanded their partnership to help more people stay fit and active. More than 10 million UNH commercial members are expected to be eligible for a yearlong subscription to Pton, which should increase the company's consumer count.

The Schall Law Firm started an investigation on behalf of investors of Pton for violating securities laws.

The stock has lost more than twenty percent of its value over the past month. It has lost a lot over the last year.

There are things that could shape Pton's performance in the future.

The financials are weak.

The total revenue for the fourth quarter was $678.70 million, down from the year before. Revenue from Connected Fitness Products came in at $295.60 million, down 54.9% from a year ago.

It had a net loss of $1.24 billion and a loss per share of $3.68. Its adjusted earnings before interest, taxes, depreciation and amortization came in at a negative $288.70 million, compared to a negative $45.10 million a year ago.

The valuations are stretched.

The industry average of 1.08x is higher than Pton's forward EV/S. The forward P/S is higher than the industry average. The forward P/ Book of 9.69x is 294.1% higher than the industry average.

The profit margins are poor.

Pton's gross profit margin is lower than the industry average. The trailing-12-month negative EBITDA and net income margins are lower than the industry average.

PTON has a trailing-12-month ROCE, ROTC, and ROTA of negative, as well as an industry average of positive.

POWR ratings reflect bad news.

Pton has a rating of F and a rating of Strong Sell. The POWR Ratings are calculated using 118 different factors.

The F grade for Quality is consistent with Pton's lower than industry profit margins. It has a D grade for value and stability, which is in line with its higher-than-industry valuation multiples.

The Consumer Goods industry has 59 stocks and Pton is one of them. The industry is given a rating.

You can click here for the additional POWR ratings for Pton.

You can see all the top stocks in the Consumer Goods industry here.

The bottom line.

In the last reported quarter, the company reported dismal top and bottom line performance. Revenue is expected to decline by 14.6% in the next five years. The next five years will see its earnings fall.

I think the stock might be best avoided at the moment.

How does the company stack up against its peers?

While PTON has an overall POWR Rating of F, one might consider looking at its industry peers, such as Mannatech, Incorporated, which has an A (strong buy) rating, and others.

The stock was trading at $8.62 per share on Friday morning. PTON has declined since the beginning of the year, while the S&P 500 has risen.

Riddhima loves analyzing financial instruments. She helps investors make informed investment decisions with her insightful commentaries.

There is more.

The post 1 stock that doesn't have anything to do with business was first published on StockNews.com.