Roku (ROKU) AI Stock Analysis

• Market Cap: $15.89B
• Dividend Yield: N/A
• Average Volume (3M): 2.85M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.27
• Revenue Growth: 16.61%
• EPS Growth: 83.98%
• Country: US
• Employees: 3,340
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.16
• Shares Outstanding: 130,797,710
• 10 Day Avg. Volume: 2,730,840
• 30 Day Avg. Volume: 2,851,036
• PEG Ratio: 1.01
• Price to Book (P/B): 4.31
• Price to Sales (P/S): 2.61
• P/FCF Ratio: 50.48
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 2.95
• Enterprise Value/Gross Profit: 6.78
• Enterprise Value/Ebitda: 55.74
• 1Y Price Target: $127.10
• Price Target Upside: 18.18% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 23
• EPS Forecast (FY): 1.31
• Revenue Forecast (FY): $5.34B

• Rating: 65 Neutral
• Price Target: $119.00 ▲(10.65% Upside)

Roku's overall stock score reflects a company with strong cash flow management and positive earnings call guidance, but facing profitability challenges and valuation concerns. The stable balance sheet and strategic initiatives provide a solid foundation for future growth, but technical indicators suggest potential short-term weakness. The optimistic earnings call outlook is a significant positive factor.

Positive Factors

Strong Platform Revenue Growth

Roku's platform revenue growth indicates robust demand for its services, enhancing its competitive position and providing a stable revenue stream.

Positive Operating Income

Achieving positive operating income reflects improved financial health and operational efficiency, supporting long-term business sustainability.

Expansion in Subscription Services

Expanding subscription services enhances revenue diversification and strengthens Roku's ecosystem, driving future growth.

Negative Factors

Profitability Challenges

Negative profit margins indicate ongoing operational inefficiencies, which could hinder long-term profitability and shareholder value.

Challenges in M&E Advertising

Pressure in the M&E advertising sector could limit revenue growth from advertising, impacting overall financial performance.

Moderate Streaming Hours Growth

Deceleration in streaming hours growth may signal saturation, potentially limiting future engagement and monetization opportunities.

Roku Business Overview & Revenue Model

Company Description

Roku, Inc., together with its subsidiaries, operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live TV, news sports, shows, and others. As of December 31, 2021, the company had 60.1 million active accounts. It also provides digital and video advertising, content distribution, subscription, and billing services, as well as other commerce transactions, and brand sponsorship and promotions; and manufactures, sells, and licenses smart TVs under the Roku TV name. In addition, the company offers streaming players, and audio products and accessories under the Roku brand name; and sells branded channel buttons on remote controls of streaming devices. It provides its products and services through retailers and distributors, as well as directly to customers through its website in the United States, Canada, the United Kingdom, France, Mexico, Brazil, Chile, Peru, North and South Americas, and Europe. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.

How the Company Makes Money

Roku generates revenue through two primary streams: Platform Revenue and Player Revenue. Platform Revenue, which constitutes the majority of its earnings, comes from advertising, subscription services, and content distribution. The company partners with various content providers and advertisers to generate ad revenue, leveraging its large user base for targeted advertising. Additionally, Roku earns money through licensing agreements with TV manufacturers that use the Roku operating system in their smart TVs. Player Revenue comes from the sale of Roku's streaming devices, which, while a smaller portion of the overall revenue, contributes to the company's brand recognition and user engagement. Key partnerships with major streaming services and advertisers also enhance Roku's revenue potential, allowing the company to capitalize on the growing trend of cord-cutting and digital streaming.

Roku Financial Statement Overview

Summary

Roku's financial performance is characterized by strong revenue growth and cash flow management, but profitability remains a challenge. The income statement shows positive revenue growth, but negative net profit and EBIT margins indicate operational inefficiencies. The balance sheet is stable with low leverage, and cash flow is robust, suggesting good financial health overall.

Income Statement

Roku's income statement shows a mixed performance. The company has achieved a positive revenue growth rate of 3.38% TTM, indicating a steady increase in sales. However, the net profit margin remains negative at -0.61% TTM, reflecting ongoing profitability challenges. The gross profit margin is relatively healthy at 43.58% TTM, but the EBIT margin is slightly negative, suggesting operational inefficiencies. Overall, while revenue is growing, the company needs to address its profitability issues.

Balance Sheet

Roku's balance sheet is relatively stable with a low debt-to-equity ratio of 0.17 TTM, indicating conservative leverage. However, the return on equity is negative at -1.08% TTM, highlighting challenges in generating returns for shareholders. The equity ratio stands at a solid level, suggesting a strong capital base. The company appears financially stable but needs to improve its profitability to enhance shareholder value.

Cash Flow

Roku's cash flow statement shows positive trends with a free cash flow growth rate of 15.10% TTM, indicating improved cash generation. The operating cash flow to net income ratio is 0.37 TTM, reflecting a decent conversion of earnings into cash. The free cash flow to net income ratio is high at 0.99 TTM, suggesting efficient cash management. Overall, the company demonstrates strong cash flow performance, which is a positive sign for its financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.54B	4.11B	3.48B	3.13B	2.76B	1.78B
Gross Profit	1.98B	1.81B	1.52B	1.44B	1.41B	808.22M
EBITDA	240.76M	219.86M	-362.87M	-148.61M	408.78M	49.93M
Net Income	-27.66M	-129.39M	-709.56M	-498.00M	242.38M	-17.51M
Balance Sheet
Total Assets	4.40B	4.30B	4.26B	4.41B	4.08B	2.27B
Cash, Cash Equivalents and Short-Term Investments	2.30B	2.16B	2.03B	1.96B	2.15B	1.09B
Total Debt	457.40M	591.93M	654.27M	719.33M	521.71M	438.32M
Total Liabilities	1.77B	1.81B	1.94B	1.77B	1.32B	942.53M
Stockholders Equity	2.63B	2.49B	2.33B	2.65B	2.77B	1.33B
Cash Flow
Free Cash Flow	448.71M	212.98M	173.24M	-149.90M	188.04M	65.81M
Operating Cash Flow	455.36M	218.04M	255.86M	11.79M	228.08M	148.19M
Investing Cash Flow	-823.74M	-25.06M	-92.62M	-201.70M	-176.82M	-81.32M
Financing Cash Flow	-179.22M	-89.20M	-61.24M	8.36M	1.00B	509.05M

Roku Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 107.55
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROKU, the sentiment is Neutral. The current price of 107.55 is below the 20-day moving average (MA) of 110.39, above the 50-day MA of 104.42, and above the 200-day MA of 88.98, indicating a neutral trend. The MACD of 1.66 indicates Positive momentum. The RSI at 48.69 is Neutral, neither overbought nor oversold. The STOCH value of 34.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ROKU.

Roku Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	77 Outperform	$30.83B	16.45	17.33%	0.75%	14.91%	9.30%
DIS	75 Outperform	$202.68B	16.58	11.78%	1.10%	3.61%	152.34%
NFLX	71 Outperform	$404.63B	36.78	42.86%	―	15.49%	35.54%
WBD	68 Neutral	$70.96B	151.87	1.36%	―	-4.29%	―
ROKU	65 Neutral	$15.89B	-530.15	-1.09%	―	16.61%	83.98%
WMG	64 Neutral	$16.34B	45.08	61.97%	2.47%	4.37%	-16.22%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%