Reasonable P/E Ratio
Strong Price to Sales Ratio
Strong Gross Profit Margin
Good Net Profit Margin
Excellent Liquidity Ratios
Minimal Debt Levels
Strong Market Position
Innovative Solutions and Technology
Robust Financial Performance
Growth in User Engagement
Continued Innovation and Expansion
High EV/EBITDA Ratio
Low Operating Profit Margin
Zero Interest Coverage
Pressure on Average Order Value (AOV)
Challenges in Advertising Revenue Growth
Instacart demonstrates strong business quality with a dominant market position, innovative solutions, and solid financial performance. However, it faces challenges regarding average order value and advertising growth amidst a mixed macroeconomic landscape. Future prospects appear promising due to user engagement and innovation, though advertising growth may be constrained by external factors.
Analysis Date: February 25, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$22.06
Current Market Price: $38.20
IV/P Ratio: 0.58x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-73.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for CART
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (21.17)
P/B ratio ≤ 1.5 (3.13)
Current ratio ≥ 2.0 (3.38x)
Long-term debt < Net current assets (0.01x)
Margin of safety (-73.0%)
CART does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
CART's gross profit margin of 75.11% indicates high efficiency in production and pricing power, which is a strong indicator of profitability.
The net profit margin of 13.46% demonstrates that CART is effective at converting revenue into actual profit, highlighting strong financial management.
With an operating profit margin of 12.16%, CART may face challenges controlling operational costs, which could impact long-term profitability.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
14.62%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
3.60%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
75.10%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
13.53%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
CART has a current ratio of 3.06 and a quick ratio of 3.06, indicating strong liquidity and ability to cover short-term obligations.
CART's debt to equity ratio is a mere 0.0097, showcasing its low leverage and solid financial stability.
An interest coverage ratio of 0.0 indicates that CART does not currently generate enough earnings to cover interest expenses, which is a significant concern.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.01x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
3.38x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Instacart holds a dominant share in the digital grocery space, leading the market with over 70% share in large basket transactions, and attracting a growing number of users. The company also demonstrates robust engagement metrics with Instacart+ members, who are increasing in both frequency and loyalty.
Instacart continually invests in innovation, including enhanced advertising solutions and enterprise technologies, which contribute to improved performance and customer satisfaction. This includes the rollout of Caper Carts, which have shown positive sales lifts for retailers.
The company reported strong financial results, including a 10% year-over-year growth in transaction revenue and adjusted EBITDA growth of 27%. These metrics reflect solid operating fundamentals and effective cost management.
The company has experienced a decline in average order value due to the introduction of lower minimum basket thresholds and the growth in restaurant orders, which generally have lower AOVs. This could impact overall revenue generation.
Instacart is witnessing strong engagement and retention among new cohorts, with increased order frequency and a loyal customer base, which bodes well for future growth.
The company has a clear roadmap for innovation, including further development of its advertising solutions and expanding its enterprise capabilities, which are expected to drive additional revenue streams.
While advertising revenue is expected to grow, there are concerns about the overall macroeconomic environment affecting food and beverage budgets, which may hinder faster growth compared to larger retail media platforms.