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Why Overstock.com (OSTK) Stock Is Gaining Today

Stocks in this article: OSTK

NEW YORK (TheStreet) -- Overstock.com (OSTK) shares are up 3.37 to $17.81 in early market trading on Wednesday after the company's CEO told Reuters that his company expects its acceptance of bitcoin as a form of payment to increase its fiscal year profit by 4 cents per share.

The online retailer started accepting bitcoin in January and has generated over $2 million in sales through the digital currency since.

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CEO Patrick Bryne said he expects bitcoin sales to be in the $6 million to $8 million range for the year, mostly from new customers. The company expects to generate $1.5 billion in sales this year.

The company said that it will accept bitcoin payments from international customers starting in September.

TheStreet Ratings team rates OVERSTOCK.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate OVERSTOCK.COM INC (OSTK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.4%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, OVERSTOCK.COM INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • OSTK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
  • The gross profit margin for OVERSTOCK.COM INC is rather low; currently it is at 18.83%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.57% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $0.38 million or 92.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: OSTK Ratings Report
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