HubSpot, Inc. - NYSE:HUBS - Comprehensive analysis
HubSpot has experienced a decline of approximately 33% from its February highs, primarily due to guidance provided during the first-quarter earnings call and a smaller-than-expected upside in quarterly results. Our focus is on HubSpot's trajectory beyond the next quarter, as we believe the company has established itself as the standard for scaling midmarket companies and is successfully moving upstream to larger organizations. HubSpot's marketing and sales automation software is developed in-house, supporting a growing and powerful portfolio, along with a robust growth profile and solid execution. The Breeze AI platform enhances HubSpot's competitive advantage, making its solutions more appealing and providing a growth tailwind for the coming years. Recent announcements, such as the customer agent release, further bolster HubSpot's artificial intelligence offerings. As a narrow-moat company, HubSpot is one of our top software picks, currently trading at a significant discount to our $690 fair value estimate. Our DCF-based valuation anticipates a 16% compound annual growth rate for revenue, driven by larger deals that improve retention and new product penetration, along with over 100 basis points of non-GAAP operating margin expansion through expense leverage. Given the company's focus on the midmarket, its shares have been volatile, and we emphasize our High Uncertainty Rating. We do not share the market's level of concern following the selloff after HubSpot's first-quarter results. The size of the quarterly upside serves as a momentum indicator rather than a fundamental factor. The fundamentals remain strong, and we expect the company to execute consistently.
Free evaluation through quantitative algorithms HubSpot, Inc. - NYSE:HUBS
Growth-Scoring Model Detail
Total Revenue Growth Over Prior Year | 21.1 | Market 93 Sector 82 |
Gross Profit Growth Over Prior Year | 22 | Market 90 Sector 82 |
EBITDA Growth Over Prior Year | 0 | Market 0 Sector 0 |
EBITA Growth Over Prior Year | 0 | Market 0 Sector 0 |
EBIT Growth Over Prior Year | 0 | Market 0 Sector 0 |
Earnings from Cont. Ops. Growth Over Prior Year | 0 | Market 0 Sector 0 |
Net Income Growth Over Prior Year | 0 | Market 0 Sector 0 |
Normalized Net Income Growth Over Prior Year | 0 | Market 0 Sector 0 |
Diluted EPS before Extra Growth Over Prior Year | 0 | Market 0 Sector 0 |
A/R Growth Over Prior Year | 13.38 | Market 81 Sector 68 |
Inventory Growth Over Prior Year | 0 | Market 66 Sector 55 |
PPE Net Growth Over Prior Year | -6.77 | Market 11 Sector 36 |
Total Assets Growth Over Prior Year | 23.6 | Market 95 Sector 84 |
Tangible Book Value Growth Over Prior Year | 48.9 | Market 88 Sector 84 |
Common Equity Growth Over Prior Year | 43 | Market 95 Sector 88 |
Cash from Ops. Growth Over Prior Year | 71 | Market 97 Sector 81 |
CAPEX Growth Over Prior Year | 12.52 | Market 71 Sector 63 |
Dividend per Share Growth Over Prior Year | 0 | Market 36 Sector 45 |
Levered Free Cash Flow Growth Over Prior Year | 38.2 | Market 82 Sector 68 |
Unlevered Free Cash Flow Growth Over Prior Year | 38.2 | Market 81 Sector 69 |
Profitability-Scoring Model Detail
Gross Margin % | 86 | Market 96 Sector 94 |
SG&A Margin % | 58 | Market 97 Sector 83 |
EBITDA Margin % | -1.51 | Market 1 Sector 29 |
EBITA Margin % | -2 | Market 1 Sector 33 |
EBIT Margin % | -2.37 | Market 2 Sector 37 |
Earnings from Cont. Ops Margin % | 0.18 | Market 5 Sector 45 |
Net Income Margin % | 0.18 | Market 5 Sector 45 |
Net Income Avail. for Common Margin % | 0.18 | Market 5 Sector 46 |
Normalized Net Income Margin % | 0.43 | Market 3 Sector 45 |
Levered Free Cash Flow Margin % | 20.1 | Market 77 Sector 77 |
Unlevered Free Cash Flow Margin % | 20.1 | Market 74 Sector 75 |
Return on Assets % | -1.13 | Market 2 Sector 38 |
Return on Capital % | -1.63 | Market 1 Sector 38 |
Return on Equity % | 0.29 | Market 4 Sector 47 |
Return on Common Equity % | 0.29 | Market 5 Sector 47 |
Total Asset Turnover | 0.77 | Market 72 Sector 67 |
