Uber (UBER) Stock Trades Below Fair Value Despite Its 60% Run

Uber Technologies has seen its share price fall 18.4% year to date and 26.7% over the past year, even after a 59.7% gain across the last three years. That mix of long term gains and more recent weakness puts a sharper spotlight on whether the current valuation is still supported by Uber's earnings power.

• The 59.7% share price return over three years keeps earlier optimism in focus and raises the question of whether earnings today are strong enough to support that step up in expectations.
• Heavy spending plans on autonomous vehicles and expansion moves such as the proposed Delivery Guru acquisition can influence future profit margins and the timing of when current earnings fully reflect those investments.
• There is a second opinion on Uber Technologies worth weighing. See what analysts think Uber Technologies's shares could be worth.

For investors, the key consideration is whether Uber's recent earnings justify the current share price in light of that uneven return profile and the new round of investment commitments.

If you are questioning whether Uber Technologies' current price really lines up with its earnings and heavy autonomous vehicle spending, it can help to compare that same earnings test across 33 high quality undervalued stocks

Does Uber Technologies Look Undervalued on Earnings?

P/E suits Uber Technologies because the group now reports positive earnings and investors are weighing how much to pay for those profits. On this yardstick, the stock trades on a P/E of 14.4x, which sits well below the Transportation industry average of 32.4x and also below a peer set near 41.8x. That is a wide gap for a business that still commands strong brand recognition in ride hailing and delivery.

The 14.4x multiple also comes in under a tailored fair multiple that adjusts for Uber Technologies' growth profile, profitability and risk, so the shares screen as undervalued on this framework. Despite management outlining more than US$10b of planned autonomous vehicle investment and the recent Delivery Guru deal, the current P/E still prices the stock at a discount to those broader benchmarks. Explore the numbers behind Uber Technologies's P/E valuation.

The Uber Technologies Narrative: What Would Justify Today's Price?

Simply Wall St Narratives builds on the Uber Technologies valuation puzzle and explains which specific paths for growth, margins and earnings would need to occur for the stock to be worth meaningfully more or less than today’s price. Each scenario is used as an ongoing thesis about the business that can be monitored over time rather than treated as a one-off snapshot. These narratives are available on Simply Wall St’s Community page for investors who want that extra layer of context.

One of the top community narratives on Uber Technologies: 42% undervalued

"The market is no longer debating whether Uber can become profitable. It is debating who owns the economics of transportation when the driver disappears…"

Discover why this Narrative puts Uber Technologies at 42% undervalued.

Before you decide on Uber Technologies, there is one more angle to check

Uber Technologies may look interesting on earnings, yet Simply Wall St’s broader review has also raised specific concerns that could change how you judge the risk side of the story. Take a closer look at 1 warning sign before settling on a valuation.

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