Is Blue Apron Holdings a Buy Under $10?

Meal-kit service provider Blue Apron Holdings, Inc. (APRN) in New York City recently announced a strategic partnership with Panasonic (PCRFY) that will offer customers advanced cooking options. In addition, it announced plans for a Blue Apron Aspiration Zero Card, which offers its cardholders rewards. Also, the company has made itself available with Amazon Alexa.

Nevertheless, APRN’s losses widened in the third quarter. The stock has declined 2.1% in price over the past month and 6.6% over the past three months to close yesterday’s trading session at $7.50. In addition, it is currently trading 41.2% below its 52-week high of $12.76, which it hit on Dec. 7, 2021.

Furthermore, ongoing labor shortages, rising input costs, and supply chain disruption make the company’s near-term prospects look bleak.

Here is what could influence APRN’s performance in the coming months:

Disappointing Financials

For its fiscal third quarter, ended Sept. 30, 2021, APRN’s net revenue declined 2% year-over-year to $109.70 million. The company’s adjusted EBITDA loss for the quarter increased 148.9% year-over-year to $11.70 million. In comparison, its net loss came in at $27.60 million, representing an 80.4% year-over-year increase. Its loss per share was  $1.17, up 21.9% year-over-year.

Poor Profitability

In terms of the trailing-12-month CAPEX/Sales, APRN’s 1.11% is 63.5% lower than the 3.03% industry average. Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA are negative versus the 12.16%, 7.25%, and 4.73% respective industry averages.

Unfavorable Analyst Estimates

For its about-to-be-reported quarter, ended Dec. 31, 2021, analysts expect APRN’s EPS and revenue to decrease 11.9% and 4.7%, respectively, year-over-year. In addition, its EPS is expected to remain negative in the quarter ending March 31, 2022, and fiscal 2022. Also, its EPS is expected to decline at a 28% rate per annum over the next five years.

POWR Ratings Reflect Bleak Prospects

APRN has an overall D rating, which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. Among these categories, APRN has a C grade for Quality, which is in sync with its lower-than-industry profitability ratios.

APRN also has a D grade for Growth. This is justified because analysts expect its EPS to decline in the near term.

The stock has a D grade for Value, which is in sync with its 5.31x trailing-12-month P/B, which is 93.3% higher than the 2.75x industry average.

The stock has a C grade for Momentum, which is consistent with its 15.5% price decline over the past year.

Beyond what I have stated above, we have also given APRN grades for Sentiment and Stability. Get all the APRN ratings here.

APRN is ranked #53 of 76 stocks in the F-rated Internet industry.

Bottom Line

APRN could continue retreating due to concerns over higher labor, food, and logistics costs in the near term. But because the stock looks overvalued at its current price level, we think it is best to avoid it now.

How Does Blue Apron (APRN) Stack Up Against its Peers?

While APRN has an overall POWR Rating of D, one might want to consider investing in the following Internet stocks with an A (Strong Buy) or B (Buy) rating: Travelzoo (TZOO), Yelp Inc. (YELP), and Alphabet Inc. (GOOGL).

APRN shares were trading at $7.50 per share on Thursday morning, down $0.00 (0.00%). Year-to-date, APRN has gained 11.44%, versus a -7.72% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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