Jun 7, 2022
[6 min Read]
DoorDash, Inc. operates a logistics platform that connects merchants, consumers, and dashers in the United States and internationally. It operates DoorDash marketplace, which provides an array of services that enable merchants to solve mission-critical challenges, such as customer acquisition, delivery, insights and analytics, merchandising, payment processing, and customer support; and offers DoorDash Drive, a white-label logistics service.
In order to undergo a comparable analysis (to determine DASH stocks value), we need to first outline who DASH's competitors are.
These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to DASH, and have a market cap similar to DASH (if possible).
By keeping this in mind, I found the following list of companies to be some of DASH stocks closest competitors:
TWTR, PINS, BCE, RBLX, SPOT, ORAN, AMOV, AMX, CHT, RELX
Overall it seems as though DASH earnings for 2021 were rather good as they were able to lessen their negative EPS, which is a sign of good things to come. However, has this trend continues into more recent times? Let's find out by looking at DASH earnings for Q1 2022.
Overall, it seems as though DASH had a poor financial performance (due to EPS decreasing by $0.03) as many of their financial metrics shrunk, most notably their EPS (by $0.03), as well as their net income (by -$12,000,000), and other metrics (as you can tell from the above bullet points).
However, DASH stock missed their EPS estimate by -$0.07 (or -17.07%), as they reported an EPS of $-0.48 for the quarter (compared to their estimated EPS of $-0.41). This contradicts the trend that DASH was headed in the right direction.
As part of their Q1 2022 earnings release, DASH stated that they currently have 349.22M Shares Outstanding (weighted average), which is up 4.75M shares (from 344.47M shares outstanding in Q4 2021). This represents a dilution of 1% which is not a lot, however, it is still something to be cognizant of as an investor.
Here is the current analyst rating distribution for DASH. In total there are 37 DASH stock analyst ratings.
Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine if DASH stock is a buy or sell
Currently, we have 2 financial ratings that help investors get a general idea of a company's valuation. These 2 metrics include ROE, and P/E, which are very common in the investing/valuation climate.
Secondly, DASH stock has an ROE rating of 3 - Neutral. DASH's current ROE is -11.29%, which justifies their rank of 3 - Neutral. ROE shows us how good (or bad) a company is at using their shareholders funds to generate money (returns). ROE is most useful when compared against the industry average, which is currently 22.79%. In my opinion since DASH ROE is both negative, and well under their peers' average, I think that their ROE Rating should be closer to a 2 - Weak, or a 1 - Very Weak.
Lastly, DASH stock has a P/E rating of 1 - Very Weak. DASH stock price to earnings ratio is currently -46.53 which justifies their rank of 1 - Very Weak. Price to Earnings is the most commonly found financial metric and is best used when comparing a company's p/e to the industry average. DASH operates in the Internet Content & Information industry, which currently has an average P/E of 53.01. This rating of - Very Weak makes a lot of sense.
Overall, based on the 2 previously mentioned fields, DASH stock has been given a comprehensive rating of 2 - Weak. This rating implies that they might run into some financial hardships if they are not careful.
As we know, DASH stock has been given an overall rating of 2 - Weak. This implies that DASH is perhaps not sound fundamentally and is not a good candidate for being “undervalued”. With this in mind, let's proceed.
Overall, DASH stock is overvalued and needs to experience a change in stock price of (an average of) -111.7% to be considered “at fair value”.
Since the P/E valuation is inflated (due to unusual financial ratios) I think it is best to use DASH's P/B commparable to determine their underlying value. The P/E comparable just confirms the fact that DASH is undervalued rather than being a determinant of value.
Overall, due to the overall stock rating of 2 - Weak (Based off of ROE and P/E), as well as the fact that a comparable analysis (P/B) found that DASH was overvalued and need to experience a price change of -9.48% in order to be at their fair value, I have concluded the following:
I would consider entering into a bearish position (if any) into DASH as the DASH Stock Forecast that we found determined that their stock was 10% overvalued.