The average target price of ACVA is 22 and suggests 54% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 28.0. This translates into 99% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 16.0. This suggests 14% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

ACV Auctions Inc. operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles. It also provides data services that offer insights into the condition and value of used vehicles, as well as offers customer financing services. ACV Auctions Inc. was incorporated in 2014 and is headquartered in Buffalo, New York.

ACV Auctions Inc.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

ACVA reported revenue of USD 674mn in the last 12 months, up 6% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 8% from FY24 to USD -0.45. Market expects EPS to reach USD 0.07 in FY25.

Over the past six months, the stock has consistently fallen, resulting in a 32% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 38ppts. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -4.5% in the last 12 months, up from -11.2% in FY23. 

Historically, ACVA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -11.0%, a growth from -15.6% in FY23. 

ACV Auctions Inc. reported a return on equity (RoE) of -16.5% in the last 12 months, down from -16.0% in FY23. The market consensus projects an RoE of 10.1% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -7.1% in the last 12 months, an increase from -8.2% in FY23. The market analysts predict that RoA will be 5.0% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to -12.0%, below the peers. The consensus estimate for FY24 for RoCE is 7.6%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.4 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

ACVA boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to bleak profitability, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, and poor cash flow generation. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, ACVA is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, ACVA is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from large to immense. We would also like to highlight the immense intraday volatility of the instrument. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. In particular, the stock is overpriced on P/E, overvalued on P/FC. 

Log in

ACV Auctions Inc.

$ 14.09

4

ACV Auctions Inc.

$ 14.09

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 14.09

About

About

About

About