Long-established in the Business Services industry, Upwork Inc (UPWK, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 4.09%, juxtaposed with a three-month change of 36.65%. 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 Upwork 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.
- Financial strength rank: 5/10
- Profitability rank: 3/10
- Growth rank: 5/10
- GF Value rank: 4/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned Upwork Inc the GF Score of 69 out of 100, which signals poor future outperformance potential.
Upwork Inc: A Snapshot of the Business
Upwork Inc is a United States-based company that operates an online marketplace that enables businesses to find and work with highly-skilled independent professionals. The company develops a platform for hiring and freelancing purposes. Its product offerings include Upwork Basic, Upwork Plus, Upwork Business, Upwork Enterprise, and Upwork Payroll. The business generates revenue from Talent and Clients across the USA, India, the Philippines, and the rest of the world. Substantial income is derived from providing services to Clients.
Financial Strength Analysis
Upwork Inc's financial strength indicators present some concerning insights about the company's balance sheet health. Upwork Inc has an interest coverage ratio of 0, which positions it worse than 0% of 801 companies in the Business Services industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 2.55, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81.
Profitability Analysis
Upwork Inc's low Profitability rank can also raise warning signals. Upwork Inc's Operating Margin has declined over the past five years ((-103,572.00%)), as shown by the following data: 2018: -4.62; 2019: -6.23; 2020: -6.00; 2021: -10.78; 2022: -14.98; .
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 Upwork Inc has a strong reputation in the Business Services industry, its current financial indicators suggest that it may struggle to maintain its historical performance. Therefore, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
