Tucows (TCX) Company Overview & Stock Price Forecast
This article provides a brief analysis and stock rating for Tucows (TCX) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.
Stock Price Target: $87.14
In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Tucows in comparison to the Internet Software industry and the S&P 500.
Tucows is a Small Cap company with a Market Cap of $440.9M.
How are investors using Tucows earnings yield to assess the company?
The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).
The current earnings yield for Tucows is 28.65%, in comparison to 5.06% for the S&P 500 and 3.13% for the 10-year treasury bond. The median earnings yield for the Internet Software industry is 4.35%.
What does Tucows Price-to-Earnings Ratio (P/E) tell investors about the company?
The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings.
Tucows does not currently have a reported P/E ratio. The P/E for the Internet Software industry is 46.40 and the P/E for the S&P 500 is 19.77.
What is the current Price-to-Sales Ratio (P/S) for Tucows?
The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.
Tucows is currently trading at a P/S of 1.45. The P/S for the Internet Software industry is 16.25 and the P/S for the S&P 500 is 2.50.
How does Tucows Price-to-BookRatio (P/B) compare to the Internet Software industry?
Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.
Tucows P/B ratio is 3.82. The P/B for the Internet Software industry is 10.5 and the P/B for the S&P 500 is 3.88.
How attractive is Tucows Return on Invested Capital (ROIC) to investors?
Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.
Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.
Tucows ROIC is currently -0.63% in comparison to 19.24% for the Internet Software industry and 9.10% for the S&P 500.
How has TCX stock performed over the past year? What is the current analyst price target?
Over the past 52 weeks, Tucows has traded between the range of $39.31 and $92.93.
The current Analyst Price Target for Tucows is $87.14.
What is Tucows YOY Performance in comparison to its industry and the total market?
The YOY performance for Tucows is -48.96%. The Internet Software industry has a YOY performance of -21.64% in comparison to the YOY S&P 500 performance of -7.88%.
Recent Financial Results (Q1, 2022)
- Net revenue for the first quarter of 2022 increased 14% to $81.1M from $70.9M for the first quarter of 2021. The increase was the result of growth in revenue from each of Ting Internet Services and Wavelo Platform Services businesses.
- Gross profit for the first quarter of 2022 increased 22% to $21.2M from $17.5M for the first quarter of 2021.
- Net loss for the first quarter of 2021 was $3.0M, or a loss of $0.28 per share, compared with net income of
$2.1M, or $0.20 per share, for the first quarter of 2021
- Adjusted EBITDA for the first quarter of 2022 decreased 11% to $11.3M from $12.7M for the first quarter of 2021.
- Cash and cash equivalents at the end of the first quarter of 2022 were $6.2M compared with $9.1M at the end of the fourth quarter of 2021 and $8.3M at the end of the first quarter of 2021.
Stock Price Target: $87.14
Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in Canada, the United States, and Europe. It operates through three segments: Fiber Internet Services, Mobile Services, and Domain Services.
The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.
This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.