Pinterest (PINS) reported third-quarter earnings after the closing bell Monday afternoon, sending shares higher in extended trading. That trend continued when the market opened this Tuesday morning as shares are up more than 18%.
This came after the company grew revenue 11% year over year to $763.2 million compared to $684.6 million in 2022. Analysts were only forecasting $744 million.
Pinterest didn’t just delight on the top line, though – it exceeded expectations on the bottom line as well. Net income of $6.73 million was a dramatic turnaround from this time last year when the company posted a net loss of $65.2 million. Net earnings of 28 cents per share was above the FactSet consensus of 21 cents per share.
CEO Bill Ready attributed this growth to a continuation in the business’ MAU growth alongside substantial margin expansion. Pinterest saw global monthly active users jump 8%, reaching an all-time high of 482 million year over year.
He also noted that the company remained resilient despite the economic challenges associated with the conflict in the Middle East. This is in stark contrast to its competitor Alphabet, the parent company of Google, which acknowledged the role this war played on their near-term advertising sales.
CFO Julia Brau Donnelly discussed the company’s ability to remain competitive in advertising segments like consumer packaged goods, financial services, restaurants, travel, technology, and auto.
The company expects to continue its growth trend into the final quarter of the year, reporting revenue growth of 11%-13%. Analysts are forecasting 11% growth.
Today’s performance has positioned the stock 22% higher in 2023, outpacing major indexes and raising the question – should you buy PINS?
Not so fast. We’ve taken a look through the VectorVest stock analysis software and discovered that it may not be time to buy this stock yet. Find out why below…
Despite Fair Safety and Very Good Timing, PINS Has Poor Upside Potential
VectorVest simplifies your trading strategy through a proprietary stock rating system that tells you what to buy, when to buy it, and when to sell it. You’re given clear, actionable insights in just 3 ratings.
These are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average. You’re even given a buy, sell, or hold recommendation for any given stock at any given time! Here’s the current situation for PINS:
- Poor Upside Potential: The RV rating draws a comparison between a stock’s 3-year price appreciation potential and AAA corporate bond rates & risk. This offers much better insight than a simple comparison of price to value alone. As for PINS, the stock has a poor RV rating of 0.57. It’s overvalued, too, with a current value of just $11.45.
- Fair Safety: PINS is a fairly safe stock with an RS rating of 0.88 - which is a bit below the average. This risk indicator is computed through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, price volatility, and other factors.
- Very Good Timing: As you can see by today’s performance PINS has very good timing, and the RT rating of 1.31 reflects that. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.01 is considered fair for PINS - but it’s not quite enough to earn the stock a BUY recommendation. VectorVest deems this stock a HOLD right now - learn more through a free stock analysis and simplify your strategy to win more trades with less work and stress!
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VectorVest advocates buying safe, undervalued stocks, rising in price. PINS outperformed compared to analyst expectations in the third quarter and shot up 18% this morning as a result. The stock has fair safety and very good timing, but poor upside potential is holding it back.
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