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GoDaddy Q3 Earnings: Is NYSE:GDDY Expensive at 546.8x Forward P/E?

in EARNINGS/INVESTING IDEAS by

GoDaddy Inc. (NYSE:GDDY) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $1.07/share on revenue of $835.3 million. The consensus earnings per share (EPS) of $1.07/share is based on a poll of 4 analysts and represents a growth in eps of 61.7% over the same quarter last year, when the company reported earnings of $0.66/share.

The revenue forecast of $835.3 million based on a poll of 13 analysts implies a year-over-year (YoY) growth in revenue of 9.8%. Last year the company reported $760.5 million in revenue for the quarter.

Expected to report EPS growth of 61.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $835.25 $760.50 9.8%
EPS $1.07 $0.66 61.7%

Earnings Call Trends

Historically, management has never exceeded analyst expectations for the last 8 tracked quarters, and missed expectations 8 quarters.

What are your expectations from GoDaddy Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.89 $0.60 −32.1% Missed
Q1, 2020 $1.14 $1.04 −9.2% Missed
Q4, 2019 $0.59 $0.55 −6.7% Missed
Q3, 2019 $0.70 $0.66 −5.0% Missed
Q2, 2019 $0.80 $0.54 −32.5% Missed
Q1, 2019 $1.01 $0.90 −10.4% Missed
Q4, 2018 $0.49 $0.38 −21.9% Missed
Q3, 2018 $0.69 $0.33 −51.9% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 7.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $73.23 $79 7.9% Increase
May 6, 2020 $68.62 $73.04 6.4% Increase
February 13, 2020 $70.90 $78.39 10.6% Increase
November 6, 2019 $62.16 $73.03 17.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.18, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.18 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

GoDaddy Inc. is currently trading at $70.89/share, down −1.9% for the day. The company is trading at approximately 79.2% of its 52-week high of $89/share. The company’s stock price is down −10.3% since the last earnings report and down −9.8% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 38.61 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:GDDY Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −23.75 and a forward P/E multiple of 546.84.

GoDaddy Inc.’s current share price also implies a price-to-book (P/B) multiple of −45.17. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $70.89
P/E Ratio −23.8x
P/E Ratio (Fwd) 546.8x
PEG Ratio 0.0
Total Debt / Total Capital 18.2%
Levered Free Cash Flow $691.4 million
EV / EBITDA 27.8x

Finbox

GoDaddy Inc. is a large-cap stock with a market capitalization of $12.051 billion and a total enterprise value of $13.978 billion. The company operates in the Information Technology sector and the IT Services industry.

GoDaddy Inc. designs and develops cloud-based technology products in the United States and internationally. The company provides domain name registration product that enables to engage customers at the initial stage of establishing a digital identity. It also offers shared Website hosting products that provide various applications and products such as web analytics, SSL certificates, and WordPress; Website hosting on virtual private servers and virtual dedicated servers products, which allows customers to select the server configuration suited for their applications, requirements, and growth; managed hosting products to set up, monitor, maintain, secure, and patch software and servers for customers; and security products, a suite of tools designed to help secure customers’ online presence. In addition, the company provides presence products, such as Websites + Marketing, a mobile-optimized online tool that enables customers to build Websites and online stores; a range of marketing tools and services designed to help businesses acquire and engage customers, as well as search engine optimization that helps customers get their Websites found on search sites; and social media management services. Further, it offers business application products, such as Microsoft Office 365, email accounts, email marketing, and telephony services. The company serves small businesses, individuals, organizations, developers, designers, and domain investors. GoDaddy Inc. was incorporated in 2014 and is headquartered in Scottsdale, Arizona.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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