Is Express Assurance the most valuable stock in the personal services sector? #美股

The overall profitability of the personal services sector is not high, and the market's expectations for the platform economy gave the sector a high valuation.

The current profit situation was combined with the valuation, and a total of 1 stock was selected.

Star description:
⭐️⭐️⭐️: The best choice, with obvious profit and growth advantages, and a large discount on the price
⭐️⭐️: The value or price is slightly inferior to the best option
⭐️: Investment portfolios suitable only for certain preferences, such as ultra-small capitalization stocks, ultra-fast growth stocks, crisis stocks, defective stocks, etc.
The investment amount is determined according to the star ratingFor example, 100 dollars for 1 star, 200 dollars for 2 stars, 300 to 400 dollars for 3 stars

Here's the analysis process 👇

Today is April 28, 2022. Before the US stock market on Thursday, let's take a look at the personal service sector in US stocks.

There are 18 stocks in total, with market capitalization ranging from 20 million to 16.5 billion, of which 14 are over 300 million. It is a relatively small sector.

According to the price-earnings ratio, there are 5 loss-making stocks less than 0, 5 from 8.5 to 25, and 4 above 25. The short-term profitability of the sector is relatively poor, and the valuation is high.

Let's first take a look at 9 stocks with a price-earnings ratio greater than 0.

The fiscal year ended on June 30. Revenue for Q1 2022 fell 70% to 190 million year on year, and Q2 continued to drop 10% to 160 million. Both operating profit and net profit for the same period turned into losses. However, judging from previous years' records, the most important revenue was in Q4, and it is currently difficult to determine full-year revenue.

The current 8.9x price-earnings ratio lacks data support.

Revenue, operating profit, and net profit have achieved rapid growth for 5 consecutive years. The average 5-year net profit growth rate was 56%, and the earnings per share growth rate also matched.

Net operating and free cash flow have also maintained net inflows for 5 years. The current ratio is 1.8, and the quick ratio is 0.65. Cash has been somewhat scarce recently.

The return on net assets increased all the way from 27% to 91%. The scale effect is very obvious, and gross margin has remained above 70%.

The balance ratio has grown rapidly in recent years, rapidly increasing from 25.6% to 49%, but judging from the income statement, there are no interest expenses; they should all be interest-free liabilities. The balance sheet shows zero accounts receivable and 180 million in inventory, which is very good. The fixed assets are only 110 million, and the total assets are only 400 million. It is a typical asset-light company. Of the liabilities, accounts payable reached 120 million, long-term and short-term leases of more than 30 million, and total liabilities of 200 million yuan, which is relatively healthy.

Overall, it appears to be a high-growth company operating at a low cost. The capital aspect will not be an obstacle to development. The main problem is the ceiling of market segmentation, which shows no sign of peaking at the current growth rate.

Currently, you can choose a price-earnings ratio of 13 times (⭐️⭐️⭐️)

Revenue and operating profit continued to grow for 5 years, yet net profit declined sharply in 2018 and 2019. Earnings per share grew more slowly than net profit, with a 4-year average growth rate of 13.3%.

Gross margin did not change much in the first three years, remaining around 23.5%, and increased to 28% and 31.5% in 2020 and 2021, respectively.

The decline in net profit in 2018 was actually due to the tax refund of 150 million yuan in 2017, which inflated net profit in 17 years. The decline in 2019 was also due to an increase of 100 million in tax costs. Taxes continued to increase in 2020 and 2021, but net profit resumed growth due to the faster growth rate of operating profit.

The income statement shows that interest expenses are gradually declining. Currently, it is 150 million, accounting for 13% of operating profit, which is not a big burden.

The balance ratio is 88%. There has not been much change in the past 5 years. There are very few accounts receivable and inventory, and non-current assets account for a large share of non-current assets. It is estimated that this trip will have to buy quite a bit of land. Although the debt ratio is very high, considering the specificity of the industry, it should not be a big problem.

Currently, the price-earnings ratio is 14.3. Considering the recent easing of the epidemic, rapid revenue growth is unlikely, so wait and see.

Revenue grew continuously for 5 years; operating profit declined significantly in 2018 and 2020, and there was no major change in 5 years; net profit declined more severely in 2018 and 2020, and only recovered to 80% of the 2017 high in 2021; changes in earnings per share were similar.

The income statement shows that the main reason for the decline in operating profit in 2018 was the decline in gross margin, while the main reason for the decline in 2020 was the rapid increase in sales and management expenses. In 2021, net profit declined even more due to an increase of 30 million dollars due to other special expenses.

2018 should be a one-time fluctuation caused by listing, and the impact of management fees in 2020 will gradually decrease, and the impact of special expenses cannot be predicted.

However, the balance ratio is very high. Currently, the balance ratio is 99.72%, the current ratio is 0.78, and the quick ratio is 0.71. There is also a problem with cash flow.

The current 21x price-earnings ratio is somewhat overestimated.

Revenue fluctuated around 2 billion dollars after falling sharply by 35% in 2018, and operating profit continued to fluctuate to 250 million after falling 49% to 290 million in 2018; net profit was a loss in 2018, growing for two years in 2019 and 2020, and falling to 125 million in 2021.

The current price-earnings ratio is 45.8 times, and neither operating profit nor net profit can support such a valuation.

Revenue and operating profit increased continuously for 5 years, while net profit declined by 12% in 2019, the 5-year average growth rate was 16%, and the growth rate in 2021 was 34.5%.

Currently, the 47x price-earnings ratio is not very attractive.

Revenue declined 26.% in 2020 and recovered in 2021, but only reached 85% in 2019. Both operating profit and net profit declined sharply in 2020, and did not fully recover in 2021.

The current 106-times PE ratio is unattractive.

Let's take a look at 5 loss-making stocks with a price-earnings ratio of less than 0.

Revenue fell slightly by 8.7% in 2020 and increased by 32% in 2021, but operating profit increased in 2020, but entered a loss range in 2021. Net profit is in line with operating profit.

According to the income statement, the increase in gross margin in 2020 combined with a sharp drop in sales and management expenses led to a sharp rise in operating profit; sales and operating expenses increased sharply by 240 million in 2021, and a slight decrease in gross margin caused a sharp drop in net profit in 2021.

Exactly how much of this 240 million is the one-time cost of listing is currently difficult to estimate. Wait until the next financial report comes out before judging.

Revenue has not changed much in the past 4 years. Losses have been lost for 4 consecutive years. Losses declined once but expanded in 2021.

Nothing appealing right now.

After revenue fell by half in 2020, growth resumed in 2021. Operating profit and net profit are both losing money, and net profit losses are still growing. Nothing appealing right now.

There was little change in revenue, but operating profit was lost from 2017 to 2019, and only slightly profitable in 2020 and 2021.

The income statement shows that the company's sales and management expenses account for an unusually high proportion. I don't know what kind of success it is for such a company to spend a lot of money to sell.

Currently, the balance ratio is 108%, which is unattractive.

Revenue grew continuously for 2 years, and both operating profit and net profit declined continuously for 2 years and entered the loss range. It doesn't have any appeal.

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