eToro Group Ltd. (NASDAQ: ETOR)

Sector: Financial Services Industry: Capital Markets CIK: 0001493318
Market Cap 2.76 Bn
P/B 1.98
P/E 12.82
P/S 0.20
ROIC (Qtr) 16.13
Div Yield % 0.00
Rev 1y % (Qtr) -33.73
Total Debt (Qtr) 54.46 Mn
Debt/Equity (Qtr) 0.04
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About

Investment thesis

Bull case

  • Strong operating cash flow of 318.25M provides robust 5.84x coverage of total debt 54.46M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.07B provide 179.49x coverage of short-term debt 5.98M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 318.25M provides exceptional 27.84x coverage of interest expenses 11.43M, showing strong debt service capability.
  • Operating cash flow of 318.25M provides strong 19.71x coverage of stock compensation 16.14M, indicating sustainable incentive practices.
  • Strong tangible asset base of 1.75B provides 32.10x coverage of total debt 54.46M, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 318.25M barely covers its investment activities of (143.54M), with a coverage ratio of -2.22, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (143.54M) provide weak support for R&D spending of 151.25M, which is -0.95x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 313.40M represents just -68.53x of debt issuance (4.57M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Short-term investments of 265.29M exceed receivables of 88.12M by 3.01x, indicating potentially inefficient capital allocation given collection cycle needs.
  • Operating cash flow of 318.25M is outpaced by equity issuance of 318.40M (1 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Capital Markets
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GS Goldman Sachs Group Inc 370.13 Bn 100.44 11.31 911.32 Bn
2 MS Morgan Stanley 303.66 Bn 21.50 5.16 353.12 Bn
3 BMNR Bitmine Immersion Technologies, Inc. 146.52 Bn -30.07 20,386.82 0.00 Bn
4 SCHW Schwab Charles Corp 111.50 Bn 193.92 27.50 27.59 Bn
5 HOOD Robinhood Markets, Inc. 66.47 Bn 30.30 15.81 0.00 Bn
6 LPLA LPL Financial Holdings Inc. 31.32 Bn 164.38 7.18 7.52 Bn
7 IBKR Interactive Brokers Group, Inc. 31.19 Bn 45.81 6.61 28.43 Bn
8 CRCL Circle Internet Group, Inc. 29.31 Bn 186.73 17.33 0.15 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.96 1.16
EV to Cash from Ops. EV/CFO 5.41 1.57
EV to Debt EV to Debt 31.62 18.65
EV to EBIT EV/EBIT 6.50 10.06
EV to EBITDA EV/EBITDA 6.20 19.26
EV to Free Cash Flow [EV/FCF] EV/FCF 5.49 17.36
EV to Market Cap EV to Market Cap 0.62 -1.88
EV to Revenue EV/Rev 0.12 293.27
Price to Book Value [P/B] P/B 1.98 4.40
Price to Earnings [P/E] P/E 12.82 1.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.90
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 7.38
Dividend per Basic Share Div per Share (Qtr) 0.00 0.69
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -9.01
Interest Coverage Int. cover (Qtr) 23.17 -165.39
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -104.09 -12,128.19
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 86.37 1,713.17
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 3.31
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 15.00 -2,037.55
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 6.20 -3,959.17
EBIT Growth (1y) % EBIT 1y % (Qtr) 5.82 734.43
EBT Growth (1y) % EBT 1y % (Qtr) 3.17 845.20
EPS Growth (1y) % EPS 1y % (Qtr) 1.18 29.40
FCF Growth (1y) % FCF 1y % (Qtr) 17.73 -3,403.50
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.24 55.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 7.72 0.52
Cash Payout Ratio Cash Payout Ratio 0.00 -0.08
Cash Ratio Cash Ratio (Qtr) 3.13 1.46
Current Ratio Curr Ratio (Qtr) 4.89 2.97
Debt to Equity Ratio Debt/Equity (Qtr) 0.04 1.45
Interest Cover Ratio Int Coverage (Qtr) 23.17 -165.39
Times Interest Earned Times Interest Earned (Qtr) 23.17 -165.39
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 2.00 -959.98
EBIT Margin % EBIT Margin % (Qtr) 1.91 -999.31
EBT Margin % EBT Margin % (Qtr) 1.83 -982.34
Gross Margin % Gross Margin % (Qtr) 6.30 53.08
Net Profit Margin % Net Margin % (Qtr) 1.60 -988.47