Leading e-commerce platform Jumia Technologies (JMIA) has seen its share price fall over the past year. However, considering the company’s recent collaboration with UPS, let’s now evaluate whether it is worth adding stock to one’s portfolio. To read.
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Jumia Technologies AG (JMIA) Offers an e-commerce platform in Africa, Portugal, Germany and the United Arab Emirates. The Berlin based The company’s platform consists of a marketplace that connects sellers and consumers; A logistics service that enables package delivery and delivery from vendor to consumer; And a payment service that allows active participants to transact on the company’s platform in selected markets.
This month, UPS and JMIA have forged a partnership to expand JMIA’s last-mile logistics capabilities and access to UPS’s infrastructure to expand its delivery services to Africa. UPS will offer its clients an extended range of delivery options, including door-to-door package delivery and collection, using a variety of payment methods using Jumia’s infrastructure in Africa. Its share price rose 19.3% last month.
However, the stock has declined 75.5% in the last year and 50% in the last six months. In addition, closing yesterday’s trading session at $ 9.32, the stock is currently trading 75.5% below its 52-week high of .0 38.06.
Here’s how to shape JMIA’s performance in the near term:
Poor bottom line performance
JMIA’s revenue rose 25.8% year-on-year to $ 62.05 million in the fourth quarter, ending December 31, 2021. However, its Operating loss Its value rose 78.3% to আগের 84.67 million a year earlier. Its net loss increased by 53.2% to $ 85.03 million from the previous quarter. Also, its cash and cash equivalents declined 68.7% year-over-year to 31 December, 2021, to 117.09 million. And its net cash used in operating activities increased 100.9% to $ 63.42 million during the period.
Premium valuation
In terms of forward price / selling, the stock is currently trading at 3.77x, which is 315.9% higher than the 0.91x industry average. Also, its 1.72x forward EV / sales 1.11x is 55.1% higher than the industry average. Also, JMIA’s 5.09x forward price / book is 107.4% higher than the 2.45x industry average.
Poor profitability
JMIA’s 0.36% trailing-12-month asset turnover ratio is 65.7% lower than the 1.06% industry average. Cash from its 12-month operation stood at $ 171.12 million, compared to the industry average of 9 159.19 million. Also, the 12-month ROA, net income margin and ROC behind it were negative 39.3%, 127.4% and 43.5% respectively.
POWR ratings reflect uncertainty
JMIA has an overall rating, which equates to a strong sale under our ownership POWR rating Method. POWR ratings are calculated based on 118 individual factors, each factor being weighed to an optimal degree.
Our proprietary rating system evaluates each stock based on eight distinct categories. JMIA has an F grade for quality and stability. Consistent with higher rating standards than the company’s industry. Also, the stock is in sync with the 3.28 beta stability grade ৷
Also, it has a D grade for quality which is justified due to its poor profitability.
F-rated out of 61 stocks Internet Industry, JMIA ranked last
Beyond what I said above, you can see JMIA ratings for Momentum, Growth and Sentiment. Here.
The last row
Considering Africa’s e-commerce sector largely unnecessary, JMIA could make huge profits in the long run if it can overcome the country’s infrastructural problems. However, due to the economic instability in Africa and the weak financial position of the JMIA, the potential advantages of the continent’s volatile markets seem doubtful in the near term. In addition, its premium valuation is not consistent with its growth potential. Therefore, we think it is better to avoid stocks now.
How does Jumia Technologies AG (JMIA) stack up against its peers?
Although JMIA has an overall D rating, one might want to consider its industry counterpart, Trivago NV (TRVG), Which has an overall A (Strong Buy) and Yelp Inc. (YELP), And Travelzoo (TZOO), Which has an overall B (By) rating.
Note that TRVG is one of the few stocks selected by our Chief Growth Strategist, Jaimini Desai, who currently has POWR stocks in the $ 10 portfolio. Learn more here.
JMIA shares fell $ 0.32 (-3.43%) in premarket trading on Monday. Year-to-date, the JMIA fell -18.25%, while the benchmark S&P 500 index rose -5.47% over the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college he did a major in finance and is currently pursuing a CFA program and is a second tier candidate.
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