Barclays lowers the target price on Groupon Inc.(GRPN:NSD) to $12

STA Research
by: STA Research

Barclays maintains Groupon Inc. with an Underweight rating and lowers the target price to $12 from $20 on the company’s stock.

Based on the Groupon Inc stock forecasts from 4 analysts, the average analyst target price for Groupon Inc is USD 27.50 over the next 12 months. Groupon Inc’s average analyst rating is Buy . Stock Target Advisor’s own stock analysis of Groupon Inc is Neutral, which is based on 6 positive signals and 7 negative signals. At the last closing, Groupon Inc’s stock price was USD 15.66Groupon Inc’s stock price has changed by -23.05% over the past week, -21.93% over the past month and -68.53% over the last year.

What we like:

Underpriced compared to earnings

The stock is trading low compared to its peers on a price to earning basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.

Superior return on equity

The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Superior capital utilization

The company management has delivered better return on invested capital in the most recent 4 quarters than its peers, placing it in the top quartile.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

Underpriced on free cash flow basis

The stock is trading low compared to its peers on a price to free cash flow basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.

High Gross Profit to Asset Ratio

This stock is in the top quartile compared to its peers on Gross Profit to Asset Ratio. This is a popular measure among value investors for showing superior returns in the long run.

What we don’t like:

Poor risk adjusted returns

This company is delivering below median risk adjusted returns in its peers. Even if it is outperforming on returns , the returns are unpredictable. Proceed with caution.

High volatility

The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.

Below median dividend returns

The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.

Overpriced compared to book value

The stock is trading high compared to its peers median on a price to book value basis.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Negative cashflow

The company had negative total cash flow in the most recent four quarters.

Low Revenue Growth

This stock has shown below median revenue growth in the previous 5 years compared to its sector.

 

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