Could GoodRx Stock’s Cash Flow Spark the Next Rally?
Here is why we think GoodRx (GDRX) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Let’s see the numbers.
- Cash Yield: GoodRx offers an impressive cash flow yield of 10.0%.
- Growing: Last 12 month revenue growth of 3.2%, not that great, but your cash pile is likely to grow.
- Valuation Discount: GDRX stock is currently trading at 35% below 3-month high, 46% below 1-year high, and 63% below 2-year high.
Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, GoodRx provides a platform for comparing and saving on U.S. prescription drug prices, alongside subscriptions, pharma manufacturer solutions, and telehealth services.
No matter where one stock goes, your portfolio should stay on track. See how High Quality Portfolio can help you do that.
| GDRX | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Health Care Technology | – |
| Free Cash Flow Yield | 10.0% | 4.1% |
| Revenue Growth LTM | 3.2% | 5.6% |
| Operating Margin LTM | 11.1% | 18.8% |
| PS Ratio | 1.5 | 3.2 |
| PE Ratio | 34.1 | 23.7 |
| Discount vs 3-Month High | -35.4% | -7.9% |
| Discount vs 1-Year High | -45.8% | -12.6% |
| Discount vs 2-Year High | -63.4% | -14.9% |
But do these numbers tell the full story? Read Buy or Sell GDRX Stock to see if GoodRx still has an edge that holds up under the hood.
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The Point? The Market Can Notice, And Reward
The below statistics are from “high FCF yield at with growth and discount” selection strategy since 12/31/2016. The stats are calculated based on selections made monthly, and assuming that a stock once picked, can not be re-picked for next 180 days.
- Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
- Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
But Consider The Risk
So, GoodRx isn’t immune to big swings. It plunged about 41% during the Covid pandemic and took an even bigger hit of nearly 93% in the inflation shock. Even with all the positives around it, the stock can still suffer serious drops when the market turns. Solid fundamentals matter, but as these moves show, nothing is completely safe when volatility hits hard.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read GDRX Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.