Tuesday, May 20, 2014

Go-Pro Financial Analysis

Go-Pro the popular camera company have recently filed an S-1 with the SEC and I have conducted a brief financial analysis on the company with the information that they have provided and conclude the following.

Go-Pro financial analysis

Income Statement
Gross Profit
2010 = 50.80% of revenue
2013 = 36.70% of revenue

2010 = 4.3% of gross profit
2013 = 20% of gross profit

Operating Expenses
2010 = 32.40% of gross profit
2013 = 72.72% of gross profit

4 yr EPS (diluted) .24 per share

Price based on PE of 15 and 4yr average EPS = $3.60
Price based on PE of 15 and most recent EPS (0.47) = $7.05

Net profit Margin
2011 = 10.51%
2013 = 6.15%

I wasn't too thrilled on the income statement, they are increeasing revnues and increasing net income yearly but they are also having costs increase at a faster rate. They sid in the report that they are facing higher product costs which have increased more than their selling prices. I think that based on their earnings they will sell at a huge premium when they go public unless they can find ways to cut their expenses

Balance Sheet
2012 = 36, 485
2013 = 101,410

Total assets
2012 = 246,665
2013 = 439,671

LT debt (and current debt) as of March 31, 2014 = 110,666

They're sitting on a lot of cash which I like and seem to increasing that cash amount mostly through changes in assets. But I think my concern would still be whether their expenses are still going to be increasing, I think if that is true then it shows that they are in a highly competitive industry. I think that because this technology is seen as popular people will buy it causing it to be priced at a huge premium but I don't think their earnings both current and average justify a price above $12 if they keep increasing their expenses.