Spotify Technology S.A.
Spotify Technology S.A. Fundamental Analysis
Spotify Technology S.A. (SPOT) shows moderate financial fundamentals with a PE ratio of 38.88, profit margin of 12.84%, and ROE of 30.35%. The company generates $17.2B in annual revenue with strong year-over-year growth of 18.31%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 88.8/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze SPOT's fundamental strength across five key dimensions:
Efficiency Score
ExcellentSPOT demonstrates superior asset utilization.
Valuation Score
ModerateSPOT shows balanced valuation metrics.
Growth Score
ModerateSPOT shows steady but slowing expansion.
Financial Health Score
ExcellentSPOT maintains a strong and stable balance sheet.
Profitability Score
ModerateSPOT maintains healthy but balanced margins.
Key Financial Metrics
Is SPOT Expensive or Cheap?
P/E Ratio
SPOT trades at 38.88 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, SPOT's PEG of 0.80 indicates potential undervaluation.
Price to Book
The market values Spotify Technology S.A. at 10.28 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 37.39 times EBITDA. This signals the market has high growth expectations.
How Well Does SPOT Make Money?
Net Profit Margin
For every $100 in sales, Spotify Technology S.A. keeps $12.84 as profit after all expenses.
Operating Margin
Core operations generate 12.78 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $30.35 in profit for every $100 of shareholder equity.
ROA
Spotify Technology S.A. generates $14.66 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Spotify Technology S.A. produces operating cash flow of $2.97B, showing steady but balanced cash generation.
Free Cash Flow
Spotify Technology S.A. generates strong free cash flow of $2.91B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $14.13 in free cash annually.
FCF Yield
SPOT converts 3.39% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
38.88
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.80
vs 25 benchmark
P/B Ratio
Price to book value ratio
10.28
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.99
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.28
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.72
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.30
vs 25 benchmark
ROA
Return on assets percentage
0.15
vs 25 benchmark
ROCE
Return on capital employed
0.25
vs 25 benchmark
How SPOT Stacks Against Its Sector Peers
| Metric | SPOT Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 38.88 | 21.66 | Worse (Expensive) |
| ROE | 30.35% | 1190.00% | Weak |
| Net Margin | 12.84% | -55754.00% (disorted) | Strong |
| Debt/Equity | 0.28 | 1.32 | Strong (Low Leverage) |
| Current Ratio | 1.72 | 1.59 | Neutral |
| ROA | 14.66% | -202359.00% (disorted) | Strong |
SPOT outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Spotify Technology S.A.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
109.00%
Industry Style: Growth, Technology, Streaming
High GrowthEPS CAGR
651.86%
Industry Style: Growth, Technology, Streaming
High GrowthFCF CAGR
262.21%
Industry Style: Growth, Technology, Streaming
High Growth