Uber (UBER) Stock Looks Undervalued Despite Recent Business Uncertainty

Uber Technologies has seen its share price fall back in recent months after a strong multi year run. That raises a simple question for investors who own or track the stock: Is the current US$65.78 share price adequately supported by the earnings the business is generating today and is expected to produce in the future?

• Over the past 5 years, Uber Technologies has delivered a total return of 53.4%, so a lot now depends on whether its earnings record can carry that performance further.

• Recent headlines around potential deals, autonomous vehicle partnerships and regulatory scrutiny can all feed into expectations for future profitability and the timing of cash generation from its ride hailing, delivery and freight operations.

• Your read on Uber Technologies is one view; the desks covering it have another. See what analysts think Uber Technologies’s shares could be worth.

For investors, the debate is whether Uber Technologies’ current valuation is justified by its earnings power once recent share price moves and ongoing business developments are taken into account.

If you want a wider starting point for research beyond Uber Technologies, a focused screen of 29 high quality undervalued stocks can be useful.

Is Uber Technologies Still Cheap on Earnings?

The P/E ratio suits Uber Technologies because earnings have become a more central part of how investors frame the story than pure revenue growth. On this measure, the stock trades on about 14.0x earnings, which sits well below the Transportation sector average of roughly 32.6x and under the broader peer group near 41.8x. A lower P/E can reflect a market view that current profits are less durable or come with higher risk, so the raw discount does not automatically make the shares cheap.

That said, a tailored fair multiple that factors in Uber Technologies’ growth profile, profit margins, size and risk places the stock above its current 14.0x level. This points to an undervalued reading on this framework. Because recent headlines around possible deals such as Instacart talks and regulatory and labor scrutiny can all weigh on sentiment, the gap between the traded P/E and this more customised yardstick may partly reflect those concerns rather than only the underlying earnings record. Explore the numbers behind Uber Technologies’s P/E valuation.

The Uber Technologies Narrative: What Would Justify Today’s Price?

Simply Wall St Narratives pick up where the valuation gap for Uber Technologies leaves off by spelling out which combinations of future growth, margins and earnings would need to materialise for the stock to be worth meaningfully more or less than today’s market price. Each narrative lays out its own set of fair value assumptions so you can line those up against actual results on the Community page as they come through.