Jun 9, 2022
[6 min Read]
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 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.
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
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).
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).
Here is the current distribution of the 32 existing AI stock ratings:
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".
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.
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".