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Roku Inc Class A ROKU

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Stock XNAS Rating as of
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$56.35 −6.46 (10.29%)
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Company Report

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Roku Earnings: Strong Quarter, but We're More Skeptical of Long-Term Path; Fair Value Down 33%

Matthew Dolgin

Roku had a very good first quarter, with impressive user engagement driving strong revenue growth and EBITDA that is tracking better than our full-year forecast. Management tempered expectations a bit for the second half of 2024 but believes it is setting itself up for acceleration in 2025. However, we’ve taken a deeper look at Roku, and we’re concerned that its customer acquisition costs must remain elevated for the account base to continue growing at a healthy clip. We’re reducing our fair value estimate to $50 per share from $75 while maintaining our no-moat rating.

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Price vs Fair Value

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ROKU is trading at a 22% discount.
Price
$58.57
Fair Value
$38.00
Uncertainty
Very High
1-Star Price
$373.21
5-Star Price
$77.50
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Roku’s huge user base will attract advertisers and allow the company to charge a premium for real estate on its home screen.

Bears

Roku can only maintain its large user base by selling devices below cost, and this strategy has not yet moved it toward profitability.

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News

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Trading Information

Previous Close Price
$62.81
Day Range
$56.10–60.74
52-Week Range
$51.62–108.84
Bid/Ask
$56.30 / $56.34
Market Cap
$8.09 Bil
Volume/Avg
18.1 Mil / 6.1 Mil

Key Statistics

Price/Earnings (Normalized)
—
Price/Sales
2.21
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
—

Company Profile

Roku enables consumers to stream television programming. It has more than 80 million streaming households and provided well over 100 billion streaming hours in 2023. Roku is the top streaming operating system in the US, reaching more than half of broadband households, according to the company. Roku’s OS is built into streaming devices and televisions that Roku sells and on connected televisions from other manufacturers that license Roku’s name and software. Roku also operates the Roku Channel, a free, ad-supported streaming television platform that offers a mix of on-demand and live television programming. Roku generates revenue primarily from selling devices, licensing, and advertising, and it receives fees from subscription streaming platforms that sell subscriptions through Roku.
Sector
Communication Services
Industry
Entertainment
Stock Style Box
Small Growth
Total Number of Employees
3,150
Website
https://www.roku.com

Competitors

Valuation

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Metric
ROKU
GOOGL
AMZN
Price/Earnings (Normalized)
 —26.4963.23
Price/Book Value
 3.456.869.24
Price/Sales
 2.216.463.28
Price/Cash Flow
 20.2618.8019.53
Price/Earnings
ROKU
GOOGL
AMZN

Financial Strength

Metric
ROKU
GOOGL
AMZN
Quick Ratio
 2.231.980.70
Current Ratio
 2.412.150.98
Interest Coverage
 −957.12285.787.45
Quick Ratio
ROKU
GOOGL
AMZN

Profitability

Metric
ROKU
GOOGL
AMZN
Return on Assets (Normalized)
 −4.90%24.48%9.11%
Return on Equity (Normalized)
 −8.36%35.00%26.76%
Return on Invested Capital (Normalized)
 −6.57%30.54%14.52%
Return on Assets
ROKU
GOOGL
AMZN
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