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Category: Overstock (OSTK) and online retail
Date: 25 August 2020 Stock price of Overstock: $116.24 We take a look at the latest earnings report of Overstock (OSTK) for the 2nd quarter of their 2020 fiscal year. The firm has come into sharp focus as its stock price surged over the last few months, leaving many to wonder of Overstock (OSTK) stock is becoming a stock bubble, similar to what is happening to Tesla (TSLA).
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In a rapidly shifting and challenging environment, Overstock continues to perform exceptionally well," said Overstock CEO Jonathan Johnson"
More About Overstock (OSTK)
Overstock.com, Inc. Common Shares (NASDAQ:OSTK) / Digital Voting Series A-1 Preferred Stock (Medici Ventures’ tZERO platform:OSTKO) / Series B Preferred (OTCQX:OSTBP) is an online retailer and technology company based in Salt Lake City, Utah. Its leading e-commerce website sells a broad range of new home products at low prices, including furniture, décor, rugs, bedding, home improvement, and more. The online shopping site, which is visited by tens of millions of customers a month, also features a marketplace providing customers access to millions of products from third-party sellers. Overstock was the first major retailer to accept cryptocurrency in 2014, and in the same year founded Medici Ventures, its wholly-owned subsidiary dedicated to the development and acceleration of blockchain technologies to democratize capital, eliminate middlemen, and re-humanize commerce. Overstock regularly posts information about the Company and other related matters on the Newsroom and Investor Relations pages on its website, Overstock.com. O, Overstock.com, O.com, Club O, and Worldstock are registered trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.
Overview of Overstock (OSTK) 2nd quarter 2020 earnings report
Second Quarter Financial Highlights
- Total net revenue was $783 million, an increase of 109% year over year
- Gross profit was $180 million or 23.0% of total net revenue, an improvement of 321 basis points year over year
- Net income attributable to stockholders of Overstock.com, Inc. was $36 million, an improvement of $61 million year over year
- Diluted earnings per share was $0.84, an improvement of $1.53 year over year
- PE ratio of 119.8
- So investors are paying $119.8 for every $1 in profits that Overstock makes. That's a yield of 0.84% on your investment. Not exactly the greatest yield out there.
- Adjusted EBITDA (non-GAAP) was $42 million, an improvement of $55 million year over year
- YTD net cash provided by operating activities was $170 million, an improvement of $236 million year over year
- YTD free cash flow (non-GAAP) improved $237 million year over year
- At the end of the second quarter, cash and cash equivalents totaled $319 million
- Cash per share: $7.87
- Cash makes up 6.5% of Overstock's stock price
- Stockholders equity in Overstock: $203.348 million
- Stockholders equity per share: $5
- So Overstock is trading at 23.9 times its stockholders equity per share. This is well outside the expected range of between 2 and 4 times that most firms tend.
- If Overstock were to sell all its assets, pay all its liabilities and distribute what is left evenly amongst stockholders you will get $5 a stock. So why on earth would you pay $119 per stock?
- For some perspective the average price to book ratio of firms in the S&P 500 is 3.7 times
Overstock management commentary on their 2nd quarter 2020 earnings
SALT LAKE CITY - July 30, 2020 - Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter ended June 30, 2020.
"In a rapidly shifting and challenging environment, Overstock continues to perform exceptionally well," said Overstock CEO Jonathan Johnson. "Second quarter gross sales in our Overstock Retail business more than doubled year over year. The number of new customers more than tripled year over year. Importantly, our customers are buying our core products—home furnishings—from the safety of their homes as part of the country's new normal. If business continues as I expect, our Overstock Retail business will achieve sustainable, profitable growth this year." "tZERO and our other Medici Ventures blockchain-based businesses continue to make progress, with several of those companies attracting media attention for their solutions to problems the country now faces," continued Johnson. "As an organization, Overstock remains focused, disciplined, and resilient as our employees execute against our strategic initiatives. I am proud of the progress we have made, and I am confident that we can continue along this profitable trajectory. I look forward to providing a full update on our progress and performance during our earnings call."
"In a rapidly shifting and challenging environment, Overstock continues to perform exceptionally well," said Overstock CEO Jonathan Johnson. "Second quarter gross sales in our Overstock Retail business more than doubled year over year. The number of new customers more than tripled year over year. Importantly, our customers are buying our core products—home furnishings—from the safety of their homes as part of the country's new normal. If business continues as I expect, our Overstock Retail business will achieve sustainable, profitable growth this year." "tZERO and our other Medici Ventures blockchain-based businesses continue to make progress, with several of those companies attracting media attention for their solutions to problems the country now faces," continued Johnson. "As an organization, Overstock remains focused, disciplined, and resilient as our employees execute against our strategic initiatives. I am proud of the progress we have made, and I am confident that we can continue along this profitable trajectory. I look forward to providing a full update on our progress and performance during our earnings call."
Overstock (OSTK) stock price history over the last 5 years
The image below shows the stock price history of Overstock over the last 5 years. And its the strong surge in the stock price over the last couple of months that has caught the attention of market commentators, punters and investors alike. Is there any reason why the stock has increased that sharply in recent months? According to us there isn't any real fundamental reason why and we believe at its currently stock price it is hopelessly overvalued. Over the last 5 years the stock of Overstock has increased by a very significant 508.60%
Stock valuation of Overstock (OSTK)
Based on Overstock's latest earnings report we value the group's stock at $16.70 a stock. We therefore believe that the stock of Overstock (OSTK) is overvalued at its current price and we rate them as a SELL
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