The average target price of W is 52 and suggests 21% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 100.0. This translates into 52% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 25.0. This is equivalent to 62% downside potential in the worst case. 

Wayfair Inc. engages in the e-commerce business in the United States and internationally. The company provides approximately thirty-three million products for the home sector under various brands. It offers online selections of furniture, décor, housewares, and home improvement products through its sites, including Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold brands. The company was founded in 2002 and is headquartered in Boston, Massachusetts.

Wayfair 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. 

W reported revenue of USD 11 852mn in the last 12 months, up 0% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 29% from FY24 to USD -2.87. Market expects EPS to reach USD 0.44 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 29ppts over past six months and grown 27ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -0.4% in the last 12 months, up from -2.5% in FY23. 

Historically, W has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -3.0%, a growth from -6.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -29.4%, below the peers. The consensus estimate for FY24 for RoCE is 21.1%, however, this time ahead of the peers. 

Wayfair Inc. reported a return on equity (RoE) of 12.9% in the last 12 months, down from 28.1% in FY23. The market consensus projects an RoE of -10.4% in FY24, however, this time below its peers. 

Another important profitability metric, return on assets (RoA), amounted to -10.4% in the last 12 months, an increase from -20.9% in FY23. The market analysts predict that RoA will be 8.1% in FY24, more robust than its peers in this period. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -3.4 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.

W 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 slow historical revenue growth, bleak profitability, negligible return on capital, inadequate interest coverage, and an unfavourable capital structure. We note low margin volatility, among the positive credit factors. 

In highly turbulent market conditions, W is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

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

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, overvalued on P/FC. 

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Wayfair Inc.

$ 65.62

2

Wayfair Inc.

$ 65.62

2

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Risk factor

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$ 65.62

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