April 20, 2024

4 Internet Stocks to Watch for Future Profits

In today’s interconnected world, the Internet plays a crucial role in communication, information and entertainment. Since the majority of the world’s population participates in online activities, it has become an essential tool. Therefore, it may be prudent to keep track of the internet stocks of trivago NV (TRVG), Pinterest, Inc. (PINS), Angi Inc. (ANGI), and eBay Inc. (EBAY).

With a digital population exceeding 307 million, the United States is a global leader in technology and is home to some of the world’s leading Internet companies. Over the past two decades, the country has steadily expanded its online presence. Today, more than 90 percent of Americans enjoy Internet access, and many consider it an indispensable part of daily life.

Additionally, the global internet services market is thriving with the digital revolution in industries such as healthcare, travel booking, and entertainment. Wireless technologies are improving productivity and reducing costs in this transformation. The global Internet services market is expected to grow at a CAGR of 4.4% through 2031.

Projected to reach 41% of global retail sales by 2027, up from 18% in 2017, e-commerce demonstrates continued expansion. This growth is expected to continue, especially during the holiday season, when consumers typically make a significant increase in purchases.

However, a persistent challenge in the Internet services sector lies in the continued need to improve infrastructure and adopt new technologies to meet the growing demand for faster and more reliable Internet connections. Additionally, addressing the increasing sophistication of cyber threats has become a crucial concern.

With these trends in mind, let’s take a look at the fundamentals of the four Internet stocks, starting with number 4.

Image #4: trivago NV (TRVG)

Headquartered in Düsseldorf, Germany, TRVG operates the world’s leading hotel search engine that allows users to find and compare accommodation options from a variety of sources, such as online travel agencies and hotels. Its platform includes a variety of adaptations and provides user convenience by providing localized websites and applications in multiple languages.

Although its trailing 12-month EBIT margin of 10.62% is 22% higher than the industry average of 8.70%, its trailing-12-month EBITDA margin of 10.90% is 43.4% lower than the industry average of 19.26%.

In the third quarter ending September 30, 2023, TRVG generated total revenue of €157.86 million ($171.79 million) and adjusted EBITDA of €16 million ($17.41 million). . Its referral income amounted to 156.10 million euros ($169.87 million).

However, its net loss increased 172.1% compared to the previous year’s quarter to 182.60 million euros ($198.71 million).

TRVG’s revenue and EPS are expected to decline 7.6% and 37.5% year-over-year to $530.52 million and $0.89 for the fiscal year ended March 2024.

The stock has risen marginally over the past month to close the last trading session at $2.45.

TRVG’s POWR Ratings reflect this mixed outlook. The stock has an overall rating of C, which is equivalent to Neutral in our proprietary rating system. POWR Ratings are calculated by considering 118 different factors, each weighted optimally.

TRVG has a C rating for momentum and stability. Within the Internet industry, it is ranked 23 out of 53 stocks.

To see TRVG’s additional POWR Ratings for Growth, Quality, Value, and Sentiment, click here.

Trend #3: Pinterest, Inc. (PAWS)

PINS operates as a visual discovery engine in the United States and internationally. The company engine allows people to find ideas and offers organization and planning tools. It displays organic recommendations and an advertising engine based on users’ tastes and preferences, allowing them to create pins of shoppable products.

PIN’s trailing 12-month gross profit margin of 76.53% is 56.1% higher than the industry average of 48.02%. However, its negative EBIT margin of 9.62% in the trailing 12 months compares to the industry average of 8.70%.

During the third quarter ended September 30, 2023, PINS’ revenue increased 11.5% year over year to $763.20 million. Its non-GAAP net income increased 152.7% from the prior-year quarter to $193.34 million. The company’s adjusted EBITDA increased 138.9% year over year to $184.67 million. However, its operating losses amounted to $5 million.

Analysts expect PINS’s earnings per share and revenue for the quarter ending December 2023 to increase 75.5% and 12.7% year-over-year to $0.51 and $988.42 million, respectively. It surpassed Street EPS estimates in each of the trailing four quarters.

While PIN shares have soared 41.4% over the past year, they have plummeted 2.3% over the past month to close the latest trading session at $36.52.

PINS has an overall rating of C, which translates to Neutral in our proprietary rating system.

It has a C rating in Momentum and Sentiment. It is ranked 22nd in the Internet industry.

Click here to see PINS’ Value, Growth, Quality and Stability Ratings.

Stock #2: Angi Inc. (ANGI)

ANGI connects home service professionals with consumers in the United States and internationally. The Company’s ads and leads connect consumers with local service professionals through a nationwide online directory of service professionals in various service categories and provide consumers with valuable tools, services and content, including reviews verified, to help them research, buy and hire. for local services; and sell websites based on terms.

ANGI’s trailing 12-month gross profit of 87.08% is 77.6% higher than the industry average of 49.02%. But its trailing-12-month EBITDA margin of 2.70% is 86% lower than the industry average of 19.26%.

In the fiscal third quarter ending September 30, 2023, ANGI’s revenue was $371.80 million. Its adjusted EBITDA increased 13% year over year to $25.90 million. However, its net loss amounted to $5.40 million and $0.01 per share.

While the Street expects ANGI’s revenue to decline 30% year-over-year to $309.10 million for the fiscal fourth quarter ended December 2023, its EPS is expected to increase 82.4% year-over-year for the same quarter.

Over the past three months, the stock has risen 37.8% to close the last trading session at $2.37. But it has declined 18% over the past year.

It’s no surprise that ANGI has an overall rating of C, which is equivalent to Neutral in our proprietary rating system.

It has a C rating in Momentum, Growth, Sentiment and Quality. Within the same industry, it ranks number 21.

In addition to the POWR Ratings listed above, ANGI Ratings for Value and Stability can be accessed here.

Stock #1: eBay Inc. (EBAY)

EBAY operates marketplace platforms that connect buyers and sellers in the United States and internationally. The company’s marketplace platform includes its online marketplace at eBay.com and eBay’s suite of mobile applications. Their platforms allow users to list, buy and sell various products.

EBAY’s trailing 12-month net income margin of 26.99% is 497% higher than the industry average of 4.52%. However, its trailing-12-month asset turnover ratio of 0.50x is 49.8% lower than the industry average of 0.99x.

On January 11, EBAY entered into a deferred prosecution agreement with the U.S. Attorney’s Office for the District of Massachusetts regarding actions taken in 2019 by former employees against Ina and David Steiner. The settlement holds eBay responsible for the misconduct of its former employees.

The company pays an annual dividend of $1, yielding 2.41% on current prices, higher than the four-year average yield of 1.57%.

During the fiscal third quarter ending September 30, 2023, EBAY’s net revenue increased 5% year over year to $2.5 billion. Its gross profit rose 3.6% year over year to $1.8 billion. Additionally, its non-GAAP EPS increased 3% from the prior-year quarter to $1.03.

However, its non-GAAP net income from continuing operations decreased 1.3% year over year to $545 million.

EBAY’s earnings per share and revenue are expected to decline 3.8% and marginally year-over-year to $1.03 and $2.51 billion in the fiscal fourth quarter ending December 2023.

However, it has surpassed consensus earnings per share and revenue estimates in each of the trailing four quarters.

The stock has gained 1.5% over the past three months to close the last trading session at $41.61. However, it has decreased by 5% over the last month.

EBAY’s POWR Ratings reflect this uncertain outlook. The stock has an overall rating of C, which is equivalent to Neutral in our proprietary rating system.

EBAY also has a C rating for value and stability. It is ranked 19 out of 55 stocks in the same industry.

Beyond the POWR Ratings noted above, we have also given EBAY Growth, Sentiment, Momentum, and Quality Ratings. Get all EBAY ratings here.

What to do next?

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PINS stock was trading at $37.04 per share on Thursday morning, up $0.52 (+1.42%). Year to date, PINS is down 0.00%, versus a 2.61% rise in the benchmark S&P 500 index over the same period.

About the author: Kritika Sarmah

Her interest in risk instruments and her passion for writing turned Kritika into a financial analyst and journalist. She earned her bachelor’s degree in business and is currently pursuing the CFA program. With her fundamental approach, her goal is to help investors identify untapped investment opportunities. Further…

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