Long-established in the Software industry, Lyft Inc (LYFT, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 4.16%, juxtaposed with a three-month change of 10.64%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Lyft Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 3/10
- 2. Profitability rank: 3/10
- 3. Growth rank: 6/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 8/10
Based on the above method, GuruFocus assigned Lyft Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Lyft Inc: A Snapshot
Lyft Inc, with a market cap of $43.82 billion, is the second-largest ride-sharing service provider in the U.S. and Canada. Incorporated in 2013, Lyft offers a variety of rides via private vehicles, including traditional private rides, shared rides, and luxury ones. Besides ride-share, Lyft has also entered the bike- and scooter-share market to bring multimodal transportation options to users. However, with sales of $4.25 billion and an operating margin of -29.68%, the company's financial health raises concerns.
Financial Strength Analysis
Lyft Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 1540 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just -2.66, suggesting potential financial distress over the next few years. Furthermore, the company's debt-to-equity ratio is 2.66, which is worse than 95.09% of 2078 companies in the Software industry, indicating over-reliance on borrowing and vulnerability to market fluctuations.
Profitability Analysis
Lyft Inc's low Profitability rank can also raise warning signals. The company's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 42.34; 2019: 39.81; 2020: 38.79; 2021: 46.94; 2022: 40.52. This trend underscores the company's struggles to convert its revenue into profits.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Lyft Inc has made significant strides in the ride-sharing industry, its financial health and profitability raise concerns about its future performance. As value investors, it's crucial to consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
