ROKU's Guru Rating Signals Mixed Outlook for Investors

ROKU INC receives a 57% rating from a value strategy. While it passes major tests like sales and debt levels, it fails on long-term earnings growth and valuation ratios, hinting at a cautious investment stance.

Date: 15-02-2025

AI Rating: 5

ROKU INC currently holds a rating of 57% according to the Value Investor model based on the teachings of Benjamin Graham. This score indicates that, while ROKU exhibits some positive indicators, it still presents challenges to potential investors.

Earnings Per Share (EPS)
EPS growth over the long-term is critical for assessing a company's profitability. In this instance, ROKU has failed in this area, which raises concerns about its future profitability. The rating indicates that investors might need to be cautious, as a failure in long-term EPS growth could hinder stock price appreciation.

Price/Earnings (P/E) Ratio
ROKU also fails on the valuation front, with its P/E ratio not meeting the thresholds set by the Value Investor model. A high P/E ratio can typically signify that a stock is overvalued, which may deter value investors who look for low ratios indicative of good entry points.

Price/Book (P/B) Ratio
Similarly, the failure in the P/B ratio further diminishes ROKU's attractiveness as a potential investment. A high P/B ratio can imply that the stock is valued too highly relative to its assets, raising a red flag for conservative investors seeking undervalued opportunities.

Positive Indicators
On the positive side, ROKU passes tests related to sales, the current ratio, and long-term debt levels relative to net current assets, which suggests financial stability in some aspects. This indicates that the company is managing its operations responsibly, which can provide a foundation for future growth if it addresses its failing metrics.

In conclusion, while ROKU shows some solid fundamentals, the failures concerning EPS growth, P/E, and P/B ratios present significant concerns that could adversely affect investor sentiment and stock prices in the near term.

Stocks: ROKU