Roku (ROKU) AI Stock Analysis

• Market Cap: $14.47B
• Dividend Yield: N/A
• Average Volume (3M): 3.38M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.67
• Revenue Growth: 17.32%
• EPS Growth: 87.79%
• Country: US
• Employees: 3,340
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.07
• Shares Outstanding: 130,251,570
• 10 Day Avg. Volume: 3,287,572
• 30 Day Avg. Volume: 3,379,930
• 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: 0.79
• Enterprise Value/Revenue: 2.61
• Enterprise Value/Gross Profit: 5.93
• Enterprise Value/Ebitda: 35.72
• 1Y Price Target: $108.36
• Price Target Upside: 10.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 24

• Rating: 77 Outperform
• Price Target: $101.00 ▲(3.05% Upside)

Roku's overall stock score is driven by strong financial performance, particularly in revenue growth and cash flow generation, despite profitability challenges. The positive earnings call and strategic initiatives like the Frndly acquisition and stock buyback program further enhance its outlook. Technical indicators show bullish momentum, although valuation concerns persist due to negative earnings.

Positive Factors

Revenue Growth

Strong platform revenue growth indicates robust demand for Roku's services and effective monetization strategies, enhancing long-term financial health.

Cash Flow Generation

Improved cash flow generation enhances Roku's ability to invest in growth opportunities and maintain financial stability, supporting long-term operations.

Strategic Acquisitions

Strategic acquisitions like Frndly enhance Roku's platform offerings and user engagement, driving sustainable growth and competitive advantage.

Negative Factors

Profitability Challenges

Negative profit margins highlight ongoing challenges in cost management and pricing, potentially impacting long-term financial sustainability.

M&E Growth Challenges

Slower M&E growth could hinder overall platform margin improvements, affecting Roku's ability to capitalize on broader industry trends.

Negative Return on Equity

Negative ROE indicates difficulties in generating shareholder returns, which may deter investment and affect long-term capital growth.

Roku Business Overview & Revenue Model

Company Description

Roku, Inc. is a leading streaming platform that offers a wide range of entertainment options through its proprietary streaming devices and smart TVs. Founded in 2002, Roku provides access to thousands of streaming channels, including popular services like Netflix, Hulu, and Disney+. The company operates primarily in the streaming media sector, focusing on both hardware sales and software services, which enables users to stream content seamlessly across various devices. In addition to its hardware products, Roku also offers an operating system for smart TVs, enhancing its ecosystem and user experience.

How the Company Makes Money

Roku generates revenue through multiple streams: 1) Device Sales - The company sells streaming devices and smart TVs, contributing to its hardware revenue. 2) Advertising - Roku earns significant income from advertising on its platform, leveraging its audience data to attract advertisers. 3) Subscription Revenue - Through partnerships with various streaming services, Roku receives a share of subscription fees when users sign up for these services via its platform. 4) Platform Revenue - This includes revenue from services like Roku Channel, where Roku offers ad-supported content and earns ad revenue. The company also benefits from partnerships with content providers and advertisers, which enhance its revenue potential through targeted advertising and promotional deals.

Roku Financial Statement Overview

Summary

Roku displays robust revenue growth and strong cash flow generation, which are positive indicators of financial health. However, persistent net losses and negative EBIT margins suggest operational challenges. The balance sheet remains strong with low debt levels, but the negative ROE indicates difficulty in generating shareholder returns. Overall, Roku is in a stable financial position with room for improvement in profitability.

Income Statement

Roku has demonstrated strong revenue growth with a TTM of $4.39 billion, up from $3.48 billion in 2023, representing a 26.2% increase. However, profitability remains a concern as the TTM net profit margin is negative at -1.4%, indicating challenges in cost management or pricing strategy. The gross profit margin is healthy at 44%, but EBIT and EBITDA margins are negative, reflecting operational inefficiencies.

Balance Sheet

Roku maintains a solid equity position with a debt-to-equity ratio of 0.19, indicating low financial leverage. The equity ratio stands at 60.5%, showcasing a robust capital structure. However, the return on equity is negative at -2.4%, due to the negative net income, indicating potential issues in generating returns for shareholders.

Cash Flow

The company's free cash flow improved significantly to $389.85 million TTM, with a free cash flow growth rate of 83% from 2024, indicating strong cash generation capabilities. Operating cash flow to net income ratio is 6.4, suggesting effective conversion of income into cash. The free cash flow to net income ratio is also strong at 6.3.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.39B	4.11B	3.48B	3.13B	2.76B	1.78B
Gross Profit	1.94B	1.81B	1.52B	1.44B	1.41B	808.22M
EBITDA	321.04M	219.86M	-362.87M	-148.61M	408.78M	49.93M
Net Income	-61.51M	-129.39M	-709.56M	-498.00M	242.38M	-17.51M
Balance Sheet
Total Assets	4.28B	4.30B	4.26B	4.41B	4.08B	2.27B
Cash, Cash Equivalents and Short-Term Investments	2.25B	2.16B	2.03B	1.96B	2.15B	1.09B
Total Debt	567.16M	591.93M	654.27M	719.33M	521.71M	438.32M
Total Liabilities	1.69B	1.81B	1.94B	1.77B	1.32B	942.53M
Stockholders Equity	2.59B	2.49B	2.33B	2.65B	2.77B	1.33B
Cash Flow
Free Cash Flow	389.85M	212.98M	173.24M	-149.90M	188.04M	65.81M
Operating Cash Flow	396.42M	218.04M	255.86M	11.79M	228.08M	148.19M
Investing Cash Flow	-118.66M	-25.06M	-92.62M	-201.70M	-176.82M	-81.32M
Financing Cash Flow	-124.82M	-89.20M	-61.24M	8.36M	1.00B	509.05M

Roku Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 98.01
• 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 Positive. The current price of 98.01 is above the 20-day moving average (MA) of 97.42, above the 50-day MA of 92.55, and above the 200-day MA of 80.51, indicating a bullish trend. The MACD of 1.90 indicates Positive momentum. The RSI at 55.03 is Neutral, neither overbought nor oversold. The STOCH value of 54.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ROKU.

Roku Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	78 Outperform	25.42B	12.26	18.92%	0.91%	16.60%	57.39%
ROKU	77 Outperform	$14.47B	―	-2.47%	―	17.32%	87.79%
DIS	76 Outperform	203.94B	17.78	10.58%	0.89%	5.00%	144.65%
WMG	71 Outperform	17.43B	59.16	50.42%	2.19%	1.36%	-45.79%
NFLX	71 Outperform	511.59B	51.49	41.07%	―	14.28%	46.86%
WBD	68 Neutral	49.07B	65.50	2.13%	―	-3.79%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

Roku Corporate Events

Roku Announces $400 Million Stock Buyback Program

On July 28, 2025, Roku‘s Board of Directors appointed Dan Jedda as both Chief Financial Officer and Chief Operating Officer, reflecting a strategic leadership consolidation. Additionally, on July 31, 2025, Roku announced a stock repurchase program authorizing the buyback of up to $400 million in Class A common stock, aiming to offset dilution from employee equity-based compensation and enhance shareholder value. The company reported strong financial performance in Q2 2025, with a 15% increase in total net revenue and an 18% rise in platform revenue, driven by video advertising and strategic acquisitions.

Roku Holds Annual Stockholders Meeting, Key Proposals Approved

On June 11, 2025, Roku, Inc. held its annual meeting of stockholders, where several key proposals were voted on. Stockholders elected Class II directors to serve until 2028, approved executive compensation, decided on an annual frequency for advisory votes on executive compensation, and ratified the appointment of Deloitte & Touche LLP as the independent accounting firm for 2025. These decisions reflect ongoing governance and operational strategies that may impact Roku’s corporate direction and stakeholder relations.