Wix.com Ltd. develops and markets an Internet service that allows users to create Web content. It offers Web development, design, and management solutions and apps through an online platform that enables its user base of businesses, organizations, professionals, and individuals to create digital presence. The company was founded in 2006 and is based in Tel Aviv, Israel.
WIX Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Wixcom Ltd. To summarize, we found that Wixcom Ltd ranked in the 54th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 28%. The most interesting components of our discounted cash flow analysis for Wixcom Ltd ended up being:
The business' balance sheet suggests that 4% of the company's capital is sourced from debt; this is greater than merely 11.23% of the free cash flow producing stocks we're observing.
Wixcom Ltd's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -22.15. This coverage rate is greater than that of only 4.95% of stocks we're observing for the purpose of forecasting via discounted cash flows.
As a business, Wixcom Ltd experienced a tax rate of about 0% over the past twelve months; relative to its sector (Technology), this tax rate is higher than only 0% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
FLT, ZBRA, NOW, NTCT, and CPSI can be thought of as valuation peers to WIX, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
Often overlooked because of its larger and higher-growth peer Shopify, e-commerce enabler Wix.com (NASDAQ: WIX) had a great first quarter of 2020. As for the headline numbers, Wix's results were in line with management's expectations outlined at the beginning of 2020. Revenue grew 24% to $216 million, driven by a 17% increase in "Creative Subscriptions" (the basic cloud-based web designer platform) to $177 million, and a 72% increase in business solutions to $39.4 million.
In an "Executive Decision" segment of Mad Money Friday evening, Jim Cramer spoke with Avishai Abrahami, co-founder and CEO of Wix.com Ltd. , the website creation platform. Shares of Wix are up 70% over the past month. Abrahami said Wix continues to provide a lot more than just great looking websites.