ContextLogic Inc. shares have lagged the S&P 500 in 2021, generating a year-to-date total return loss of 80.3 percent.
Earnings
A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value.Growth
Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 21.3. Unfortunately, analysts are not expecting ContextLogic to turn a profit over the next four quarters.The current consensus earnings per share estimate for ContextLogic for 2022 is a per-share loss of 30 cents. ContextLogic’s consumer discretionary sector peers are currently averaging a 31 forward earnings multiple.
Yet when it comes to evaluating a stock, earnings aren’t everything.
The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is about 1.0. Once again, without positive earnings, ContextLogic doesn’t have a positive PEG ratio to use as a valuation gauge.
The price-to-sales ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is 3.26, well above its long-term average of 1.63. ContextLogic’s PS ratio is 0.86, nearly 75 percent below the S&P 500 average. ContextLogic’s PS ratio is also down roughly 83.2 percent over the past year, suggesting the stock is priced at the low end of its historical valuation range.
