Upstart (UPST -2.76%) is a young, high-growth company that is also profitable. In this Motley Fool Live segment from "Ask Us Anything," recorded on June 22, Fool.com contributor John Bromels takes a closer look at the valuation for Upstart.
John Bromels: What is interesting, this is a profitable company for being a young company, a high-growth company that is needing to spend on advertising to get the word out about its products and services, it has been profitable for a year, which is actually good. Cash burn of course has been occurring. We were making cash, making cash, making cash and then again this last quarter, I can't stress enough, was tough. However, return on capital employed. This is a measure of management's effectiveness. How well are they spending their money? 13.7 percent which is actually better than I thought it was going to be for Upstart. That is not a bad number. Let's see.
Then the valuation metric. What's interesting here, you saw that revenue was up and slackening in this last quarter. Earnings were up, but dropped in this last quarter. But because the stock price has gone down, look at that PS ratio, 3.5, and that PE ratio is about 23. Here's what I think is interesting. Remember from the top of the hour, we looked at these for Amgen. Upstart right now, technically, just by the metrics has a better valuation than does Amgen, which is very interesting to me. I'm going to stop the share so we can hopefully pack in another couple of companies. But what's really interesting is by the metrics at least. I feel like right now, Upstart is actually looking fairly attractive.
