Strong Earnings and Share Repurchases can Reverse the C3.ai Stock

Today we are looking at C3.ai, Inc. (NYSE: AI), to determine if the AI stock is a good buy. We will look at AI financial ratios, analyst ratings, and valuation to determine a C3.ai stock forecast and price. Key Information for my C3.ai Stock Forecast  C3.ai, Inc. Competitors  In order to undergo a comparable analysis (to determine AI stocks value), we need to first outline who C3.ai's competitors are. These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to AI, and have a market cap similar to AI (if possible). By keeping this in mind, I found the following list of the closest C3.ai competitors: DV, CLGX, VNT, DQ, OCFT, QTWO, DAVA, SWI, PSTG, SAIC C3.ai Stock News and Information Recent C3.ai Stock News: Price Target Increased and Rating Upgraded from "Hold" to "Buy" C3.ai was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a report issued on Wednesday, Zacks.com reports. The brokerage currently has a $22.00 price objective on the stock. Zacks Investment Research‘s price objective suggests a potential upside of 6.08% from the company’s current price. Anytime that there is a rating ugrade, it is typically a good sign for the stock. This should be no different for C3.ai, and it will be interesting to see if any other researchers/analysts start to change their C3.ai stock forecasts as well. Analysis of C3.ai, Inc. Stock Earnings and Financial Ratios C3.ai Earnings (Yearly): AI Revenues: In FY 2022, AI experienced a yearly increase in revenues of $69.54M (or 37.96%) resulting in a total revenue figure of $252.76M. AI Cost of Revenues: In FY 2022, AI experienced a yearly increase in their cost of revenues of $19.19M (43.11%), resulting in a total revenue figure of $63.71M. AI Gross Profit: In FY 2022, AI experienced a yearly increase in their gross profit of $50.35M (or 36.3%) resulting in a total gross profit of $189.05M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY. AI EBITDA: In FY 2022, AI experienced a yearly decrease in their EBITDA of -$135,391,000 (or -267.07%) resulting in a total EBITDA of $-186.09M. This is odd as C3.ai reported a very good gross profit figure, more research may need to be done to explin this. AI Net Income: In FY 2022, AI experienced a yearly decrease in their net income of -$136,369,000 (or -244.85%) resulting in a total net income of $-192.06M. AI EPS: As a result of AI's decrease in net income of -$136,369,000, AI's EPS also decreased (by $-1.00) from $-0.9 in FY 2021 to $-1.9 in FY 2022 Overall, in 2021, C3.ai's earnings report was not very good as their most important figures (EPS, EBITDA, and Net Income) all fell by large amounts. There was significant revenue and gross profit growth, but these positives are highly outweighed by the decreases in AI's EPS, EBITDA, and Net Incomes. This makes a lot of sense as C3.ai is a growth  company, so we can expect their revenues to be growing quickly, while their bottom line (Net income and EPS) dive further in the negatives. Although the 2021 C3.ai earnings report was poor, there is still hope that they could have turned things around on their more recent earnings reports. So let's have a look C3.ai Earnings (Quarterly): AI Revenues: In Q4 2022, AI experienced a quarterly increase in revenues of $2.54M (or 3.65%) resulting in a total revenue figure of $72.32M. AI Cost of Revenues: In Q4 2022, AI experienced a quarterly increase in their cost of revenues of $9,000 (0.05%), resulting in a total revenue figure of $17.36M. Since the increase (of 0.05%), in AI's cost of revenue was lesser (by -3.59%) than the increase (of 3.65%) in AI's revenues, we should expect that AI experienced an increase (roughly 3.59%) in their Q4 gross profits. AI Gross Profit: In Q4 2022, AI experienced a quarterly increase in their gross profit of $2.54M (or 4.84%) resulting in a total gross profit of $54.95M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between Q4 and Q3. This is great to see, however, we know that this is where thinngs started to fall apart in the C3.ai earnings report for 2021. AI Net Income: In Q4 2022, AI experienced a quarterly decrease in their net income of -$18,973,000 (or -48.1%) resulting in a total net income of $-58.42M. AI EPS: As a result of AI's decrease in net income of -$18,973,000, AI's EPS also decreased (by $-0.19) from $-0.38 in Q3 2022 to $-0.57 in Q4 2022. Once again, C3.ai was able to increase their revenues and gross profits, but despite this growth they still ended up reporting negative net incomes and a more negative EPS. Overall, it seems as though AI had a poor financial performance (due to EPS $-0.19) as both their net income and EPS figures were mmore negative than the previous quarter (Q3 2022). This again signifies that C3.ai is straying further from profitability, which could have adverse effects down the road. There was some good from this report however as C3.ai beat their EPS estimate by $0.03 (or 5.17%), as they reported an EPS of $-0.55 for the quarter (compared to their estimated EPS of $-0.58). C3.ai has Negative Share Dilution? Yes, you did read that right! Within their Q4 2022 earnings release, C3.ai reported having 102.32M Shares Outstanding, which is down -2.77M shares (105.09M shares outstanding in Q3 2022). This is very good to see as an investor as their shares now represent a larger portion of the C3.ai company (more valuable). Latest AI Stock Analyst Ratings Here is the current distribution of the 32  existing AI stock ratings: 15 Buys 8 Holds 9 Sells This is a little bit of a mixed bag here. Most analysts have C3.ai rated as a "buy", however, the "buy" rating does not represent a majority in the available analyst ratings. This is typically a bad sign as analysts are usually more bullish than not, so these ratings are usually more skewed toward the 'buy side". Let's Determine a C3.ai Price Forecast Using a Comparable Analysis to Determine the Value behind AI Stock Price to Book (P/B): AI's current P/B ratio is 2.14, compared to the average P/B ratio of AI's peers being 5.39. This implies that AI is undervalued and their share price should change by a factor of 151.36% to be at fair value (based on AI's P/B compared to the P/B of their peers). This may be inflated due to their industry being very new and specualtive (their competitors have high ratios). Price to Equity (P/E): AI stock P/E ratio is currently -11.05, compared to the average P/E ratio of AI's peers being -5.41. This implies that AI is overvalued and their share price should change by a factor of -51.03% to be at fair value (based on AI's P/E compared to the P/E of their peers). Once again this might be inflated due to C3.ai's industry. From this we are able to land on a single comparable price target for you. This being that C3.ai's stock price is undervalued by (an average of) 50.17%. This is generally a good sign as it implies that C3.ai has better financial ratios, and is in a better financial position than their competitors. Determining Wheter C3.ai is a Good Stock to Buy? Let's summarize everything (good and bad) that we have discussed throughout this C3.ai articel. Firtsly, we know that C3.ai has reported poor financials. This makes it hard to invest into their stock as there is no end in sight for their increasing losses in both net incomes and EPS. However, given the fact that they have received analyst upgrades, they beat their last earnings (EPS), there are more bullish analysts than netrual or bearish analysts, their stock dilution is negative, and they have better financials ratios than their average competitor. Weighing both the negatives and positives that we have found about the C3.ai stock. I think it is safe to say that the positive aspects of C3.ai heavly outweight the negative, and as a result C3.ai is a "buy".

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Strong Earnings and Share Repurchases can Reverse the C3.ai Stock

Jun 9, 2022

bullish

general Analysis

[6 min Read]

blog post cover photo

Today we are looking at C3.ai, Inc. (NYSE: AI), to determine if the AI stock is a good buy. We will look at AI financial ratios, analyst ratings, and valuation to determine a C3.ai stock forecast and price.

Key Information for my C3.ai Stock Forecast

C3.ai, Inc. Competitors

In order to undergo a comparable analysis (to determine AI stocks value), we need to first outline who C3.ai's competitors are.

These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to AI, and have a market cap similar to AI (if possible).

By keeping this in mind, I found the following list of the closest C3.ai competitors:

DV, CLGX, VNT, DQ, OCFT, QTWO, DAVA, SWI, PSTG, SAIC

C3.ai Stock News and Information

Recent C3.ai Stock News: Price Target Increased and Rating Upgraded from "Hold" to "Buy"

C3.ai was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a report issued on Wednesday, Zacks.com reports. The brokerage currently has a $22.00 price objective on the stock. Zacks Investment Research‘s price objective suggests a potential upside of 6.08% from the company's current price.

Anytime that there is a rating ugrade, it is typically a good sign for the stock. This should be no different for C3.ai, and it will be interesting to see if any other researchers/analysts start to change their C3.ai stock forecasts as well.

Analysis of C3.ai, Inc. Stock Earnings and Financial Ratios

C3.ai Earnings (Yearly):

  • AI Revenues: In FY 2022, AI experienced a yearly increase in revenues of $69.54M (or 37.96%) resulting in a total revenue figure of $252.76M.
  • AI Cost of Revenues: In FY 2022, AI experienced a yearly increase in their cost of revenues of $19.19M (43.11%), resulting in a total revenue figure of $63.71M.
  • AI Gross Profit: In FY 2022, AI experienced a yearly increase in their gross profit of $50.35M (or 36.3%) resulting in a total gross profit of $189.05M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY.
  • AI EBITDA: In FY 2022, AI experienced a yearly decrease in their EBITDA of -$135,391,000 (or -267.07%) resulting in a total EBITDA of $-186.09M. This is odd as C3.ai reported a very good gross profit figure, more research may need to be done to explin this.
  • AI Net Income: In FY 2022, AI experienced a yearly decrease in their net income of -$136,369,000 (or -244.85%) resulting in a total net income of $-192.06M.
  • AI EPS: As a result of AI's decrease in net income of -$136,369,000, AI's EPS also decreased (by $-1.00) from $-0.9 in FY 2021 to $-1.9 in FY 2022

Overall, in 2021, C3.ai's earnings report was not very good as their most important figures (EPS, EBITDA, and Net Income) all fell by large amounts. There was significant revenue and gross profit growth, but these positives are highly outweighed by the decreases in AI's EPS, EBITDA, and Net Incomes. This makes a lot of sense as C3.ai is a growth company, so we can expect their revenues to be growing quickly, while their bottom line (Net income and EPS) dive further in the negatives.

Although the 2021 C3.ai earnings report was poor, there is still hope that they could have turned things around on their more recent earnings reports. So let's have a look

C3.ai Earnings (Quarterly):

  • AI Revenues: In Q4 2022, AI experienced a quarterly increase in revenues of $2.54M (or 3.65%) resulting in a total revenue figure of $72.32M.
  • AI Cost of Revenues: In Q4 2022, AI experienced a quarterly increase in their cost of revenues of $9,000 (0.05%), resulting in a total revenue figure of $17.36M. Since the increase (of 0.05%), in AI's cost of revenue was lesser (by -3.59%) than the increase (of 3.65%) in AI's revenues, we should expect that AI experienced an increase (roughly 3.59%) in their Q4 gross profits.
  • AI Gross Profit: In Q4 2022, AI experienced a quarterly increase in their gross profit of $2.54M (or 4.84%) resulting in a total gross profit of $54.95M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between Q4 and Q3. This is great to see, however, we know that this is where thinngs started to fall apart in the C3.ai earnings report for 2021.
  • AI Net Income: In Q4 2022, AI experienced a quarterly decrease in their net income of -$18,973,000 (or -48.1%) resulting in a total net income of $-58.42M.
  • AI EPS: As a result of AI's decrease in net income of -$18,973,000, AI's EPS also decreased (by $-0.19) from $-0.38 in Q3 2022 to $-0.57 in Q4 2022. Once again, C3.ai was able to increase their revenues and gross profits, but despite this growth they still ended up reporting negative net incomes and a more negative EPS.

Overall, it seems as though AI had a poor financial performance (due to EPS $-0.19) as both their net income and EPS figures were mmore negative than the previous quarter (Q3 2022). This again signifies that C3.ai is straying further from profitability, which could have adverse effects down the road.

There was some good from this report however as C3.ai beat their EPS estimate by $0.03 (or 5.17%), as they reported an EPS of $-0.55 for the quarter (compared to their estimated EPS of $-0.58).

C3.ai has Negative Share Dilution?

Yes, you did read that right! Within their Q4 2022 earnings release, C3.ai reported having 102.32M Shares Outstanding, which is down -2.77M shares (105.09M shares outstanding in Q3 2022). This is very good to see as an investor as their shares now represent a larger portion of the C3.ai company (more valuable).

Latest AI Stock Analyst Ratings

Here is the current distribution of the 32 existing AI stock ratings:

  • 15 Buys
  • 8 Holds
  • 9 Sells

This is a little bit of a mixed bag here. Most analysts have C3.ai rated as a "buy", however, the "buy" rating does not represent a majority in the available analyst ratings. This is typically a bad sign as analysts are usually more bullish than not, so these ratings are usually more skewed toward the 'buy side".

Let's Determine a C3.ai Price Forecast

Using a Comparable Analysis to Determine the Value behind AI Stock

  1. Price to Book (P/B): AI's current P/B ratio is 2.14, compared to the average P/B ratio of AI's peers being 5.39. This implies that AI is undervalued and their share price should change by a factor of 151.36% to be at fair value (based on AI's P/B compared to the P/B of their peers). This may be inflated due to their industry being very new and specualtive (their competitors have high ratios).
  2. Price to Equity (P/E): AI stock P/E ratio is currently -11.05, compared to the average P/E ratio of AI's peers being -5.41. This implies that AI is overvalued and their share price should change by a factor of -51.03% to be at fair value (based on AI's P/E compared to the P/E of their peers). Once again this might be inflated due to C3.ai's industry.

From this we are able to land on a single comparable price target for you. This being that C3.ai's stock price is undervalued by (an average of) 50.17%. This is generally a good sign as it implies that C3.ai has better financial ratios, and is in a better financial position than their competitors.

Determining Wheter C3.ai is a Good Stock to Buy?

Let's summarize everything (good and bad) that we have discussed throughout this C3.ai articel. Firtsly, we know that C3.ai has reported poor financials. This makes it hard to invest into their stock as there is no end in sight for their increasing losses in both net incomes and EPS. However, given the fact that they have received analyst upgrades, they beat their last earnings (EPS), there are more bullish analysts than netrual or bearish analysts, their stock dilution is negative, and they have better financials ratios than their average competitor.

Weighing both the negatives and positives that we have found about the C3.ai stock. I think it is safe to say that the positive aspects of C3.ai heavly outweight the negative, and as a result C3.ai is a "buy".

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AI

C3.ai, Inc.

18.91

-0.24
-1.25%

Return

-3.17%
Change % Since Posting
-0.62
Change Since Posting
19.53
Price When Posted

Metrics

21.48
Target Price
7/ 10
Confidence
2-6 Months
Timeframe
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News
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SEC
Filing
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