Symbolic today
(As of 11/22/2024 ET)
- 52 week range
- $17.11
▼
$59.82
- Target price
- $44.31
Symbotic NASDAQ: SIM is a revolutionary robotics company whose shares have risen significantly over the past three months. During this period, shares rose 52%. Despite this, the stock is still down nearly 30% for all of 2024. A big contributor to the company’s recent growth is its fourth-quarter earnings report, released on November 18th.
This analysis highlights industrial stocks that have delivered more than 250% total returns over three years. It looks at key details from the earnings report, examines Symbotic’s expanded deal with the world’s largest retailer and provides insight into its long-term prospects.
Symbotic’s innovative products improve warehouse efficiency
Symbotic creates robotic systems that improve warehouse efficiency. Symbotic robots are fully autonomous and sort, move and retrieve packages in the warehouse. This provides Symbotic customers with a number of benefits. First, they can help reduce labor costs associated with warehouse operations since companies need fewer people. This especially helps warehouse companies since the industry has many unionized workers.
A Bureau of Labor Statistics report found that the transportation and warehousing industry had a 16% union membership rate in 2023. This is one of the highest rates in the private sector. Companies have a clear incentive to move away from unions that inflate their labor costs higher than they would otherwise be. Automation is one way to achieve this.
In addition, Symbotic robots can move through warehouses at incredible speeds of over 20 miles per hour. Machine software with artificial intelligence allows you to make dynamic decisions in real time, analyzing changes in demand for products. These benefits improve warehouse efficiency and profit maximization compared to labor.
Analysis of Symbotic’s latest earnings
Symbotic’s fourth-quarter earnings report showed sales were 23% higher than expected. Adjusted earnings per share (EPS) were nearly seven times higher than expected. As a result, Symbotic shares jumped nearly 28% in one day. Shares fell about 7% as some investors likely cashed in the next day.
Symbotic Inc. price chart (SYM) on Friday, November 22, 2024
Beyond these fundamentals, the improvement in the company’s adjusted gross margin was a huge achievement. This is important because the company’s biggest expense is actually manufacturing and installing the robotic systems. If it has trouble generating profits, the company will have limited growth potential in the bottom line earnings it can provide to investors. Adjusted gross profit shows how much income a company retains after covering production and installation costs.
The importance of this metric was demonstrated in the third quarter, when shares fell more than 20% after the earnings report. The significant decline in the company’s adjusted gross profit obscured the fact that it beat revenue estimates. Fortunately, the company did exactly what it promised in the fourth quarter, with adjusted gross profit increasing by more than 300 basis points. It’s now slightly above fourth-quarter 2023 levels, although sales are up 44%.
Signs point to continued strength in the future
A huge tailwind for Symbotic is its massive $22.4 billion backlog. This figure represents 12 times the revenue the company generated in the last 12 months. This shows the huge demand for Symbotic’s products and that there is still a lot of growth ahead for them. There is also evidence that the company is speeding up the installation of its systems. This allows the company to quickly convert the backlog into actual revenue. In the fourth quarter, the number of installations started and completed reached their highest quarterly levels.
Symbolic stock forecast today
$44.31
Growth potential 14.24%Moderate purchase
Based on ratings from 14 analysts
| High forecast | $60.00 |
|---|---|
| Average forecast | $44.31 |
| Low forecast | US$10.00 |
Forecast details for symbolic shares
Symbotic’s largest client is Walmart. New York Stock Exchange: WMT; in fiscal year 2023, it contributed 88% of total revenue. Symbotic recently announced an expansion of its relationship with Walmart. Symbotic will implement its automation systems in two new Walmart distribution centers in Mexico. It said the projects would add another $400 million to the company’s portfolio. The deal with Walmex has the potential for further expansion.
On top of all this positive news, Wall Street is optimistic. The average of the five price targets issued following the earnings report suggests a 40% upside potential for the stock. I’m also optimistic about Symbotic’s future. From what I’ve seen, management is keeping their promises. Additionally, Symbotic’s addressable market is huge. The relationship with Walmart provides trust. Business experts are known as the world’s largest consumer goods company for their management skills. Having faith in the company that Walmart believes in doesn’t make me lose sleep at night.
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