Is FuboTV Stock Overvalued Or Undervalued?

Fubotv Inc FUBO shares have lagged the S&P 500 in 2021, generating a year-to-date total return of 18.3%.

FuboTV’s stock has had a wild ride in 2021, but investors may be wondering whether there’s any value to be found in FuboTV shares.

Earnings: A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value.

For comparison, the S&P 500’s PE is currently at about 29.4, nearly double its long-term average of 15.9. FuboTV doesn’t currently have a PE ratio because the company is not profitable. In the most recent quarter, FuboTV reported a $105.9 million net loss.

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Growth: Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 21.6. Unfortunately, analysts are not expecting FuboTV to turn a profit over the next four quarters.

The current consensus earnings per share estimate for FuboTV for 2022 is a per-share loss of $2.19. FuboTV’s communication services sector peers are currently averaging a 21.3 forward earnings multiple.

Yet when it comes to evaluating a stock, earnings aren't everything.

The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is about 0.9. Once again, without positive earnings, FuboTV doesn’t have a positive PEG ratio to use as a valuation gauge.

Price-to-sales ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is 3.19, well above its long-term average of 1.62. FuboTV’s PS ratio is 11.2, more than three times the S&P 500 average. FuboTV's PS ratio is also up 39.2% over the past year, suggesting the stock is priced at the high end of its historical valuation range.

Finally, Wall Street analysts see value in FuboTV stock over the next 12 months. The average analyst price target among the eight analysts covering FuboTV is $43.50, suggesting about 62.4% upside from current levels.

The Verdict: At today's price, FuboTV stock appears to be overvalued based on a sampling of common fundamental valuation metrics.

Photo: Courtesy FuboTV