Roku, Inc. (ROKU) Stock Is Bruised, But Is It Still a Buy?

Despite closing 1.04 points higher on 06 December, Roku, Inc. (NASDAQ:ROKU) remains a key investment for many, but the stock is also a popular trading vehicle. Here’s how to trade it using charts and trading levels Friday. The shares accumulated 2.61 percent at $40.82 with a light trade volume of 4.167 million shares. After opening the session at $38.47, the shares went as high as $40.84 and as low as $38.042, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $4.47 billion and now has 109.41 million shares outstanding. Roku, Inc. (ROKU) stock has lost -28.2 percent of market value in 21 trading days.

ROKU stock has a trailing 3-year beta of 0, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.09 a share in the trailing twelve months. The stock’s value has fallen -21.17 percent year to date (YTD) against a rise of 3.47 percent in 12 month’s time. The company’s shares still trade -47.38 percent away from its 1-year high of $77.57 and 40.76 percent up from 52-week low of $29.00. The average consensus rating on the company is 2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Roku, Inc. (ROKU) will probably climb 65.78 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $97-month high price target. This represents a whopping 137.63 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $66.5, which represents a return potential of 62.91 percent when compared to the closing price of the stock of $40.82 on Thursday, December 06. The lowest price target for the stock is $49 — slightly more than 20.04 percent from ROKU’s current share price.

History has shown that shares in Roku, Inc. have gone up on 2 different earnings reaction days and are predicted to add 0.15 percent when the company reports upcoming earnings. Investors will get their next glimpse of ROKU’s Q4 earnings on February 20. Analysts are forecasting revenue to climb 38.6 percent to $261M in the fiscal fourth quarter, while earnings are seen soaring by nearly -100 percent to $0 per share. It earned -$0.09 per share, better than the -$0.12, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $173M, better than the $170M analysts expected. Earnings are estimated to increase by -41.9 percent this year, 0 percent next year and continue to increase by 20 percent annually for the next 5 years.

Let’s take a look at some insider activity at Roku, Inc. (NASDAQ:ROKU) and see the pattern. The earliest insider trade took place on 12/03/2018. Kay Stephen H parted with a total of 36 thousand shares of company at average share price of $41.59. The total for the sales was set at $1.5 million. After this transaction, the SVP General Counsel, Secretary account balance stood at 50 thousand shares. The stock lost -1.85 percent since that insider sale. On 11/30/2018, Smith Chas, GM, Sr. VP Roku TV & Players, sold 16.32 thousand shares at a price per share of $40.66. This removed 663.53 thousand shares from the insider’s fortune and the stock saw a 0.39 percent rally in value since the news became public. This transaction left 0 thousand shares in the GM, Sr. VP Roku TV & Players account.

On 11/01/2018, SVP General Counsel, Secretary Kay Stephen H performed a sale transaction worth $2.05 million. This sale at $56.92 each has eliminated 36 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -28.29 percent decrease since the transaction was reported. The insider now is left with 50 thousand shares remaining in the account. Smith Chas, who performs the GM, Sr. VP Roku TV & Players job, sold 99.13 thousand shares for $5.16 million. The disposal occurred on 10/25/2018 was priced at $52.08 per share. The share price plunged -21.62 percent since the reporting date. Smith Chas now left with a stake of 0 thousand ROKU stock worth $0 thousand after the insider selling.

The stock is currently hovering around the first support level of $38.96. Below this, the next support is placed in the zone of $37.1. Till the time, the ROKU stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 37.93 on daily chart, which may remain a cause for comfort. If the price breaks below $37.1 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $41.76 mark may result into a pull-back move towards $42.7 level.

Further, it is sporting a 6.82 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8.24. 44.8 percent is the gross profit margin for Roku, Inc. and operating margin sits at -1.8 percent. Along with this, the net profit margin is -1.3 percent.