When a company buys back its own stock, it typically retires those shares, reducing the total number of shares outstanding. This means that any earnings generated are divided by a smaller number of shares, which has the effect of boosting the amount of profit per share. Even though a company’s earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It’s almost impossible for a company to grow its earnings without growing its revenue for long periods. Here at Zacks, we prioritize appraising the change in the projection of a company’s future earnings over anything else. That’s because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

  1. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
  2. Uber’s move to repurchase its own stock suggests that the company’s board of directors believes shares are currently undervalued.
  3. Later that year, Uber purchased Ottomotto, a startup specializing in developing autonomous trucks.
  4. The $43.17 billion and $50.34 billion estimates for the current and next fiscal years indicate changes of +15.8% and +16.6%, respectively.

The value of shares and ETFs bought through a share dealing account can fall as well as rise, which could mean getting back less than you originally put in. Our $68 fair value estimate represents an enterprise value of four times our 2023 revenue estimate. We project that Uber’s revenue could grow 17% on average annually over the next five years. With its 4-star rating, we believe Uber’s stock is undervalued compared with our long-term fair value estimate. Uber Technologies’ stock was trading at $61.57 at the start of the year. Since then, UBER stock has increased by 26.7% and is now trading at $78.03.

Earnings and Valuation

In December 2013 Uber suffered from a huge lawsuit from 35,000 Uber drivers, claiming to be treated as employees, not contract workers. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

Gaining traction in more markets, here’s what we think of Uber stock. Upgrade to MarketBeat All Access to add more stocks to your watchlist. 2,159 employees have rated Uber Technologies Chief Executive Officer Dara Khosrowshahi on Glassdoor.com. Dara Khosrowshahi has an approval rating of 83% among the company’s employees.

Uber shares trading hours

Lack of adequate compensation and/or benefits also constitutes a human capital ESG risk, in our view, as it can lead to drivers jumping to other platforms and reversing the network effect. We note that both Uber and Lyft are likely to demand higher take rates. Uber gathers data from riders and drivers, learning about the location and timing of ride requests.

Uber Stock FAQ

However, the revenue for its most established segment – rides – increased 19 per cent year over year to $2.90 billion. Uber’s network effects benefit drivers and riders, creating a continuous virtuous cycle. As a first mover in this market, Uber began to attract riders mainly via word-of-mouth. Growth in demand open source internet of things and further word-of-mouth marketing attracted more drivers, increasing the firm’s vehicle supply. As the number of drivers has increased, the timeliness and reliability of the service has improved, attracting further users, which in turn attracts more drivers—all of which indicates a network effect.

In addition, it remains possible that Lyft out-innovates Uber to emerge as the top ride-hailing provider. There are also concerns about whether the firm’s network effect can remain an economic moat source if it is forced to incur additional costs imposed through regulations at the municipal, state, and/or federal levels. For example, Uber may be forced to conduct more thorough background checks on all driver applicants, such as adding costlier fingerprinting to the driver application process everywhere in the United States. Such concern is also an ESG risk related to human capital, as a lack of enough background checks may put riders at risk and lessen the quality of the firm’s services.

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The company is scheduled to release its next quarterly earnings announcement on Tuesday, May 7th 2024. Bus ticketing platform redBus, earlier this month, became the first independent mobility company to join ONDC. As a technology company, Uber views open source tech stacks such as ONDC with a lot of interest and recognizes the opportunities they bring for everyone, Uber CEO Dara Khosrowshahi said on Thursday.

Uber has faced legal action in several jurisdictions due to its classification of drivers as gig workers and independent contractors. Ridesharing companies like Uber have disrupted taxicab businesses and allegedly caused increased traffic congestion. New Rank-Based ScoringMarketRank™ is calculated by averaging available category scores (with extra weight given to analysis and valuation), then ranking the company’s weighted average against that of other companies. The partnership could allow Uber to win more users, compete better with local rivals and help boost public transport use in the world’s most populous country. For the first quarter, Lyft expects bookings to come in between $3.5 billion and $3.6 billion, beating Wall Street’s previous call for bookings of $3.46 billion.

In July 2016 Uber announced that it had completed its two billionth ride, just six months after reaching one billion, a prime example of the “network effect”. Its Core Platform includes Ridesharing and Uber Eats, while the Other Bets segment covers New Mobility platforms and Uber Freight. We’d like to share more about how we work and what drives our day-to-day business. The author or authors do not own shares in any securities mentioned in this article. We assign Uber a Very High Uncertainty Rating, based on the number of competitors in the market and its network effect. Sign-up to receive the latest news and ratings for Uber Technologies and its competitors with MarketBeat’s FREE daily newsletter.

This can be considered a long-term investment, as the individual is usually waiting for the price to rise over time. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Uber. For the next fiscal year, the consensus earnings estimate of $1.96 indicates a change of +68.3% from what Uber is expected to report a year ago. For the current fiscal year, the consensus earnings estimate of $1.16 points to a change of +33.3% from the prior year. Uber share price history started in May 2019 when Uber finally went public.

And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Firstly, they can buy shares in companies on the exchanges where they are listed. For instance, you can invest in UBER shares on the NYSE stock exchange, so you actually own a share in the company.

A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Certain Zacks Rank stocks for which no month-end price was available, https://forexhero.info/ pricing information was not collected, or for certain other reasons have been excluded from these return calculations. Zacks may license the Zacks Mutual Fund rating provided herein to third parties, including but not limited to the issuer. Uber Technologies Inc. is a San Francisco-based company providing mobility, food and package delivery services and freight transport.

This website is using a security service to protect itself from online attacks. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. “Today’s authorization of our first-ever share repurchase program is a vote of confidence in the company’s strong financial momentum,” Uber CFO Prashanth Mahendra-Rajah said. The company’s shares rose more than 5% to $72.50 in trading before the bell. Uber Technologies (UBER Quick QuoteUBER – Free Report) has recently been on Zacks.com’s list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock’s performance in the near future.

Rather than signaling a threat to Uber, the guidance indicates that the ride-hailing space is looking healthier than previously thought. Over the next three years Uber expects gross bookings growth in the mid to high teens percentage and adjusted core profit growth in the high 30s to 40%. The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Uber. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term. In April 2015 Uber started the UberEats service, which became another hit. In 2014 Uber entered the Chinese market, which offered the potential to become the company’s largest market.