Coursera (COUR) Stock Looks Fairly Valued After An 86% Fall

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Coursera stock is coming off a steep five year share price decline. The market based valuation checks now suggest the shares may be pricing in some caution rather than clear over optimism

• Coursera has fallen 85.9% over the past five years, which leaves current holders focused on whether today’s price better reflects the company’s long term prospects

• Future revenue growth and the ability to convert that into predictable cash flows can support a higher justified valuation over time. Any setback in scaling profitably or managing costs could limit how much investors are willing to pay for the stock

• With a mixed score of 3 out of 6 on the broader valuation checks, Coursera screens as neither an obvious bargain nor clearly overpriced

The issue now is whether Coursera’s current share price offers enough compensation for the business risks after such a large drawdown

Find out why Coursera’s -40.4% return over the last year is lagging behind its peers

P/S is often a useful guide for Coursera because it is still building profitability and investors are paying mainly for its revenue base. Coursera trades on a P/S ratio of about 2.0x, compared with a Consumer Services industry average of roughly 1.0x and a peer average near 1.7x. On the face of it, that puts the stock at a premium to the wider sector and slightly above similar companies

However, the fair P/S ratio implied by the broader checks sits much higher, around 5.2x, which is significantly above Coursera’s current 2.0x level. That gap suggests the current valuation is not aggressive relative to what might be expected once the company’s growth profile, margins and risk are all taken into account. For investors, the key question is whether Coursera can sustain the business quality that would justify something closer to that fair multiple.

Overall, Coursera stock currently trades at a lower P/S multiple than the fair multiple implied by these fundamentals

See what the numbers say about this price — find out in our valuation breakdown

For Coursera, Simply Wall St Narratives pick up where the valuation puzzle leaves off. They spell out which combinations of future growth, margins and earnings would need to play out for the stock to be worth materially more or less than it is today, and you can find them on the company’s Community page. Each narrative treats Coursera’s fair value as a thesis about how the business might develop that you can revisit over time, rather than a one off snapshot.

Source: ca.finance.yahoo.com