Ziff Davis

Ziff Davis Inc is assigned a 3-star quantitative star rating, indicating our belief that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 21% discount to our quantitative fair value estimate of $71.03 per share; however, caution is warranted due to this estimate's high uncertainty rating. We require the price/fair value ratio to move a certain amount before the star rating can change. This stability-enhancing buffer is in effect for this stock.

The company's valuation metrics increase our estimated fair value. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. For example, the firm's book value yield of 115.9% falls in the top 30% compared with global peers. The market price is low relative to the book (accounting) value of the company's equity, which contributes to our view that shares are undervalued.

Alternatively, the firm's lack of growth is potentially concerning. Stagnant revenue and earnings growth indicates a company's challenges in increasing market share and profitability. The firm's EBIT 3-year growth, for example, lies in the bottom 1% globally. Earnings before interest and taxes has exhibited poor growth over the last three years. The future could be difficult for the firm, which, despite our favorable price/fair value ratio, is a negative attribute.

With its quantitative economic moat rating of none, this business is unlikely to consistently outearn its cost of capital without structural protection from competition. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.