Buy or Sell Progyny Stock?

Progyny (PGNY) stock has jumped 9.2% during the past day, and is currently trading at $26.82. We believe there are only a couple of things to fear in PGNY stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $2.3 Bil in market cap, Progyny provides fertility and family building benefits, including personalized concierge support, selective fertility specialist networks, and surrogacy and adoption reimbursement programs for employers in the U.S.

[1] Valuation Looks Moderate

This table highlights how PGNY is valued vs broader market. For more details see: PGNY Valuation Ratios

[2] Growth Is Strong

• Progyny has seen its top line grow at an average rate of 23.1% over the last 3 years
• Its revenues have grown 11% from $1.1 Bil to $1.3 Bil in the last 12 months
• Also, its quarterly revenues grew 9.3% to $313 Mil in the most recent quarter from $287 Mil a year ago.

This table highlights how PGNY is growing vs broader market. For more details see: PGNY Revenue Comparison

[3] Profitability Appears Weak

• PGNY last 12 month operating income was $86 Mil representing operating margin of 6.8%
• With cash flow margin of 16.4%, it generated nearly $208 Mil in operating cash flow over this period
• For the same period, PGNY generated nearly $57 Mil in net income, suggesting net margin of about 4.5%

This table highlights how PGNY profitability vs broader market. For more details see: PGNY Operating Income Comparison

[4] Financial Stability Looks Very Strong

• PGNY Debt was $25 Mil at the end of the most recent quarter, while its current Market Cap is $2.3 Bil. This implies Debt-to-Equity Ratio of 1.1%
• PGNY Cash (including cash equivalents) makes up $345 Mil of $795 Mil in total Assets. This yields a Cash-to-Assets Ratio of 43.4%

[5] Downturn Resilience Is Very Weak

PGNY has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• PGNY stock fell 60.9% from a high of $66.66 on 8 November 2021 to $26.06 on 16 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $46.08 on 15 August 2022 , and currently trades at $26.82

 
2020 Covid Pandemic

• PGNY stock fell 53.7% from a high of $35.60 on 18 February 2020 to $16.47 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 27 November 2020

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 PGNY Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. 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.