Timing Is Everything: Groupon Inc (GRPN)

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In fact, Groupon’s doing better than deal competitor Amazon when it comes to valuation as its -$0.08 EPS on a five dollar and change share price is certainly better than Amazon with -$0.09 EPS on a $265 share price. And Groupon’s forward P/E of 23.82 is more heartening than Amazon’s at 73.84. Groupon has no debt and Amazon has $4.38 billion in debt to $11.45 billion in cash. While some pundits think Groupon could almost double to $10 in the next year few think Amazon could go to $500 in a year.

Also, a major hedge fund has been showing some conviction in Groupon. Tiger Global Management LLC has almost a 10% stake in Groupon worth over $300 million. Sterne Agee upgraded Groupon to a Buy on February 13 admitting they may be early but they like the push into e-commerce. Just hedging their bets, though, the analyst added this is an “out-of-consensus upgrade” and it was for a longer term timeframe.

Analysts are giving Groupon an estimate of 47.10% growth for next year and 26.56% annual growth rate for five years (yoy). eBay only has a 14.53% five year growth rate but it has the lowest forward P/E of these at 17.72. eBay is also close to 52 week highs and almost back to its all-time high from 2005.

The Punchline

If Mason can beat on earnings on February 27 he has a shot of staying in the show. If not he has only a few months left after that to prove there was method to his madcap-ness.  Groupon is still very much a speculative stock even if it has risen over $5.00. It’s too early to tell if this e-commerce push is as promising as Sterne Agee thinks, so wait until after earnings to see the reactions as Groupon has a tendency to sell off afterward. I still like both eBay and Amazon as long term investments despite their maturity (relative to Groupon) and I wish for his shareholders’ sake Mason would quit kidding around.

The article Timing Is Everything originally appeared on Fool.com and is written by AnnaLisa Kraft.

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