The average target price of VTEX is 8.7 and suggests 41% 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 12.0. This translates into 94% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 7.3. This suggests 18% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

VTEX provides software-as-a-service digital commerce platform for enterprise brands and retailers. Its platform enables customers to execute their commerce strategy, including building online stores, integrating, and managing orders across channels, and creating marketplaces to sell products from third-party vendors. It has operations in Brazil, Argentina, Chile, Colombia, France, Italy, Mexico, Peru, Portugal, Romania, Spain, the United Kingdom, and the United States. VTEX was founded in 2000 and is headquartered in London, the United Kingdom.

VTEX

Technology

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. 

VTEX reported revenue of USD 228mn in the last 12 months, up 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 28% from FY24 to USD 0.08. Market expects EPS to reach USD 0.08 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). Within the past six months, its performance has trailed this peer group's by 9ppts and its growth decelerated by 6ppts 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 neither favourable nor unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 6.9% in the last 12 months, up from 2.4% in FY23. 

Historically, VTEX has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 6.7%, a growth from -6.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.4% in the last 12 months, an increase from -3.9% in FY23. The market analysts predict that RoA will be 3.9% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 5.7%, below the peers. The consensus estimate for FY24 for RoCE is 0.0%, again behind the peers. 

VTEX reported a return on equity (RoE) of 6.3% in the last 12 months, up from -5.3% in FY23. The market consensus projects an RoE of 5.5% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.5 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.

VTEX has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite stable and is somewhat unfavourable 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 moderate. We note resilient historical revenue growth, low margin volatility, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to bleak profitability, negligible return on capital.

In highly turbulent market conditions, VTEX is volatile. In other words, the stock will fall much more 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 large. 

In normal market circumstances, VTEX is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

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VTEX

$ 6.18

3

VTEX

$ 6.18

3

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 6.18

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