Buy or Sell Zeta Global Stock?
Zeta Global (ZETA) stock has jumped 8.3% during the past day, and is currently trading at $20.70. We believe there are only a couple of things to fear in ZETA stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | High |
| What you get: | |
| Growth | Very Strong |
| Profitability | Very Weak |
| Financial Stability | Very Strong |
| Downturn Resilience | Very Weak |
| Operating Performance | Strong |
| Stock Opinion | Fairly Priced |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $4.6 Bil in market cap, Zeta Global provides an omnichannel cloud platform utilizing consumer intelligence and marketing automation, analyzing vast data to predict intent and distill insights from diverse consumer data points.
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[1] Valuation Looks High
| ZETA | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 3.8 | 3.3 |
| Price-to-Earnings Ratio | -202.3 | 23.5 |
| Price-to-Free Cash Flow Ratio | 32.8 | 20.7 |
This table highlights how ZETA is valued vs broader market. For more details see: ZETA Valuation Ratios
[2] Growth Is Very Strong
- Zeta Global has seen its top line grow at an average rate of 30.6% over the last 3 years
- Its revenues have grown 36% from $901 Mil to $1.2 Bil in the last 12 months
- Also, its quarterly revenues grew 25.7% to $337 Mil in the most recent quarter from $268 Mil a year ago.
| ZETA | S&P 500 | |
|---|---|---|
| 3-Year Average | 30.6% | 5.5% |
| Latest Twelve Months* | 35.9% | 6.1% |
| Most Recent Quarter (YoY)* | 25.7% | 7.3% |
This table highlights how ZETA is growing vs broader market. For more details see: ZETA Revenue Comparison
[3] Profitability Appears Very Weak
- ZETA last 12 month operating income was $7.7 Mil representing operating margin of 0.6%
- With cash flow margin of 14.6%, it generated nearly $178 Mil in operating cash flow over this period
- For the same period, ZETA generated nearly $-23 Mil in net income, suggesting net margin of about -1.9%
| ZETA | S&P 500 | |
|---|---|---|
| Current Operating Margin | 0.6% | 18.8% |
| Current OCF Margin | 14.6% | 20.4% |
| Current Net Income Margin | -1.9% | 13.1% |
This table highlights how ZETA profitability vs broader market. For more details see: ZETA Operating Income Comparison
[4] Financial Stability Looks Very Strong
- ZETA Debt was $197 Mil at the end of the most recent quarter, while its current Market Cap is $4.6 Bil. This implies Debt-to-Equity Ratio of 4.3%
- ZETA Cash (including cash equivalents) makes up $385 Mil of $1.2 Bil in total Assets. This yields a Cash-to-Assets Ratio of 33.5%
| ZETA | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 4.3% | 20.8% |
| Current Cash-to-Assets Ratio | 33.5% | 7.1% |
[5] Downturn Resilience Is Very Weak
ZETA 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
- ZETA stock fell 67.9% from a high of $13.31 on 7 April 2022 to $4.27 on 1 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 May 2024
- Since then, the stock increased to a high of $36.74 on 11 November 2024 , and currently trades at $20.70
| ZETA | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -67.9% | -25.4% |
| Time to Full Recovery | 676 days | 464 days |
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 ZETA 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.