Updated Buy Recommendation for Roku

8 days ago

Parkev Tatevosian, CFA

"So, now let's look at the company's valuation. And according to my discounted cash flow model, Roku's business is worth $11 per share. The current market price is $95. So, applying a margin of safety, this stock looks fairly valued using my proprietary discounted cash flow model. And then going back to fiscal.ai, which is my preferred data source, I'm using the forward price to operating cash flow for Roku because the company's earnings per share is more volatile. So, I'm using the forward OCF price to OCF. And this number at 18 looks undervalued for Roku given its prospects and the longer-term tailwinds for the streaming industry. This stock looks overall comprehensively slightly undervalued based on current market prices. So, I still like the business and even at current market prices, I like the long-term opportunity for investors. So, I will update my buy recommendation for Roku stock today."

The speaker updates his buy recommendation for Roku citing a discounted cash flow model that values the stock at $11 per share compared to a market price of $95, and a forward operating cash flow multiple at 18. He considers Roku slightly undervalued due to its long-term growth prospects in the streaming industry, reinforcing a bullish stance on the company.

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