Think Roku Is Expensive? This Chart Might Change Your Mind.

Core Viewpoint - Roku's stock, despite high valuation ratios, may not be as expensive as perceived when considering its sales-based valuation and growth potential [1][2][3] Group 1: Valuation Metrics - Roku's shares trade at 120 times forward earnings estimates and 95 times free cash flows, which raises concerns among value investors [1] - The current stock price appears expensive due to the company's unprofitability, but this is attributed to its focus on revenue growth rather than profitability [2] Group 2: Sales Growth and Market Position - Roku has experienced explosive sales growth, with a significant decline in its price-to-sales (P/S) ratio over the last four years, indicating a potential undervaluation [3][4] - The company is in the early stages of international expansion, which is expected to contribute to continued sales growth in the coming years [4] Group 3: Comparison with Other Stocks - Most stocks within Roku's current P/S range are characterized as low-growth businesses, suggesting that Roku's stock deserves a higher P/S ratio due to its growth potential [5]