This morning, Cardlytics Inc (CDLX) issued a press release raising its forecast for the quarter dramatically. And as a result, share prices followed suit – climbing as high as 62%! Below, we’ll help you determine if this stock is worth adding to your portfolio or if you missed the window.
The company, which specializes in digital advertising, issued a much higher revenue outlook for the first quarter. While the initial estimate was between $54-$63 million, the company now expects revenue to come in as high as $66.5 million.
Revenue isn’t the only metric the company is expecting to improve on this quarter either. Billings (a metric that takes into account consumer incentives) has been raised to $93-$97 million from the previous $84-$93 million.
And, while Cardlytics is still expecting a steep loss in the quarter, profitability is expected to improve from the original outlook as well. The original EBITDA loss was projected to be $10-$17 million. But now, the company is looking for a loss of just $5-$8 million.
This is a pleasant surprise as the digital advertising environment is less than favorable right now. Companies are tightening their budgets as consumer spending is down, and yet, Cardlytics is using a shift to a product-led operating structure to overcome these challenges. Along with improved revenue here in the US, Chief Executive Karim Temsamani points to a more rigorous cost structure management.
In saying all this, the stock has fallen more than 89% in the last year and reached a record low just last week on March 28, where it fell to just $2.60/share. So – it’s fair to have skepticism that things are actually turning around for Cardlytics.
The good news? You don’t have to play the guessing game in making your next move with this stock. We’ve got 3 things you need to see through the VectorVest stock analyzer software to help you feel confident going forward.
Despite Fair Timing, CDLX Still Has Poor Upside Potential and Very Poor Safety
The VectorVest system helps investors make more informed decisions with less work - all through a proprietary stock rating system. Three simple ratings tell you what to buy, when to buy it, and when to sell it.
These are relative value (RV), relative safety (RS), and relative timing (RT). Each rating sits on its own scale of 0.00-2.00, with 1.00 being the average. Based on these three ratings, VectorVest is able to provide an overall rating for a stock along with a clear buy, sell, or hold recommendation. You can get a recommendation for CDLX by reading below…
- Poor Upside Potential: Even with the boosted outlook for the quarter, the long-term price appreciation potential for CDLX is poor - with an RV rating of 0.76. This rating is based on a 3-year price projection for the stock alongside AAA corporate bond rates and risk.
- Very Poor Safety: In terms of risk, CDLX has very poor safety - with an RS rating of just 0.46. This rating is calculated by analyzing the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
- Fair Timing: The one thing CDLX has going for it right now is timing - with an RT rating of 1.06. This is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year.
The overall VST rating for CDLX is poor at just 0.81. So, what should you do with this opportunity as an investor - get in now or wait to see if this newly formed price trend holds?
Don’t play the guessing game or let emotion influence your decision-making. Get a clear answer on your next move and execute it with confidence using a free stock analysis at VectorVest.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for CDLX, it has poor upside potential along with very poor safety. But, the timing is fair as the negative price trend has turned around and begun to move in the right direction after an improved outlook for the quarter.
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