Formula One Group engages in the motorsports business in the United States and internationally. It holds commercial rights for the world championship, approximately a nine-month long motor race-based competition in which teams compete for the constructors' championship and drivers compete for the drivers' championship. The company was founded in 1950 and is based in Englewood, Colorado. Formula One Group is a subsidiary of Liberty Media Corporation.

Formula One Group

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The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

FWONK reported revenue of USD 3 513mn in the last 12 months, down 4% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 218% from FY24 to USD -0.35. Market expects EPS to reach USD 1.32 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 19ppts and its growth accelerated by 16ppts in the past month. 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 mildly favourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.5% in the last 12 months, a decline from 24.6% in FY23. 

Historically, FWONK has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -2.9%, down from 5.7% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -1.0%, below the peers. The consensus estimate for FY24 for RoCE is 6.8%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to -0.9% in the last 12 months, a decrease from 1.7% in FY23. The market analysts predict that RoA will be 2.7% in FY24, again weaker than its peers. 

Formula One Group reported a return on equity (RoE) of -1.5% in the last 12 months, down from 2.8% in FY23. The market consensus projects an RoE of 4.4% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 in the past several years. This ratio implies a weak 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.

FWONK boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and is average 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 and we point to negligible return on capital, poor working capital management. We note resilient historical revenue growth and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, FWONK is as volatile as an index. In other words, the stock will move with 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 limited. 

In normal market circumstances, FWONK is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. We would also like to highlight the negligible intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

Formula One Group

$ 96.84

4

Formula One Group

$ 96.84

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 96.84

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