The company reported a larger loss for the fourth quarter. The company affirmed a weak sales outlook for the first quarter as it expects to continue struggling with weakened demand. We think it is time to avoid this stock since it has lost 75% of its value so far this year. Please read on.
shutterstock.com - StockNews The company has a market cap of $2.78 billion. The company's connected fitness products include a bike, a bike+, and a tread+. It has access to live and on-demand classes.
Pton was a winner of the coronaviruses. During the H1N1 epidemic, the company's home exercise equipment and subscription-based fitness classes were in high demand. The stock has been on a downhill ride since reaching a peak in January 2021.
The slowing of consumer demand has hit Pton hard. The company reported a wider operating loss for the fourth quarter. The company had a net loss and loss per share of over a billion dollars. The company has lost money for six quarters in a row.
Pton's member count went down. The company added 4,000 net- connected fitness subscriptions in the fourth quarter, which was less than in the year-ago quarter. The total platform workouts came in at 148.2 million, down from 148.6 million in the previous year.
Its average monthly workouts per connected fitness subscription fell 26% year-over-year to 14.
The company is trying to cut costs through layoffs. The company expects the subscribers count to stay the same and revenue to be between $625 million and $650 million, which is below analyst estimates.
Year-to-date and over the past year, Pton has declined in price. The stock hit a high of $100.36 in October of 2011.
I believe that this could affect Pton's performance in the coming months.
The financials are getting worse.
The revenue for the fourth quarter was $678.70 million, a decline of 27.5% from the same period in the previous year. The company's cost of revenue went up from a year ago. Its total operating expenses increased by more than 100 percent. The company's adjusted earnings came in at a negative $288.70 million, worse than the previous year.
Pton had a net loss of over $1 billion and a loss per share of over $4. The company had cash outflows from operating activities and free cash outflows.
There is a leak of growth prospects.
In the first quarter of the next fiscal year, analysts expect Pton's revenues to decline by 22%. The current quarter's loss per share is expected to be $0.67. The company missed revenue estimates in each quarter.
The revenue estimate of $3.06 billion shows a decline from the previous year. The company is expected to have a loss per share of $2.21 for the year.
The valuation is frothy.
Pton's forward EV/Sales is 24.6% higher than the industry average. Its forward Price/Sales is higher than the industry average. The stock has a forward Price/Book of 8.78x, which is higher than the 2.32x industry average.
It's low profitability.
Pton's gross profit margin is lower than the industry average. The trailing-12-month EBIT margin is negative. The stock has a negative net income margin compared to the industry.
The stock has a ROCE, ROTC, and ROTA of negative, as well as an industry average of 14.98% and 5.05%. The asset turnover ratio is lower than the industry average.
POWR ratings reflect bad news.
Pton has an overall F rating and a Strong Sell rating. POWR Ratings are calculated by considering 118 different factors.
Each stock is evaluated based on eight different categories. Pton has an F grade for Sentiment, which is in line with its weak revenue and earnings growth predictions.
The stock has a D grade for value. The Stability grade of D is justified by itsBeta of 1.69
Pton is a stock in the Consumer Goods industry.
We have given Pton grades for quality, growth, and momentum. Here, you can get all Pton ratings.
The bottom line.
The company incurred huge losses in the fourth quarter. The market for connected fitness is expected to remain challenging for the foreseeable future.
The stock is currently trading below its 50-day and 200 day moving averages. Pton has disappointing financials, unfavorable analyst estimates, stretched valuation, and lower-than-industry profitability, so it could be a good idea to avoid the stock now.
How does the company stack up against its peers?
A POWR rating of F equates to a Strong Sell rating for Pton. It is possible to invest in other Consumer Goods stocks with a Strong Buy rating.
The shares fell in pre market trading. PTON has declined since the beginning of the year, while the S&P 500 has risen.
Her interest in the stock market led to her becoming a financial journalist. She looks to help retail investors understand the underlying factors before they make investment decisions.
There is more.
The post was first published on Stock News.com.
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