Why Qurate Retail Stock Could Climb Even Higher

Qurate Retail, Inc. (NASDAQ:QRTEA) is an American media conglomerate and one of the top ecommerce retailers in North America. The company is comprised of seven retail brands: QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, and Grandin Road. They reach approximately 218 million homes worldwide via 14 television networks multiple streaming services. QVC may always be a 80's and 90's staple, but the company has adapted to the times admirably. 

Qurate Retail stock is up 249% in the last 12 months. This includes a May 10 six-year high of $14.62. Nevertheless, analysts remain on the sidelines, with the two brokerages in coverage maintaining tepid "hold" ratings. More gains could be wrought from a short squeeze though, considering a healthy 6% of QRTEA's total available float is sold short. At the stock's average pace of trading, it would take shorts six days to buy back their bearish bets.

From a fundamental point of view though, Qurate Retail stock is not the safest available on the market despite beating earnings expectations across the board on all four of the company's most recent quarterly earnings reports. QRTEA holds $8.29 billion in total debt and only $739 million in cash, which could cause potential problems in the long-term for the company.

Qurate Retail has also struggled to find consistency on the bottom-line, despite having fairly consistent revenue growth over the past few years. In fiscal 2018 QRTEA's net income shrunk by 24%, and the following year its net income declined by $1.372 billion, taking Qurate Retail to $456 million in net losses for fiscal 2019. However, QRTEA bounced back in major way in fiscal 2020, as shoppers turned to the internet during the Covid-19 pandemic. The company reported a net income of $1.2 billion, which was a $1.66 billion increase compared to the previous fiscal year. Additionally, Qurate Retail's trailing 12-month net income is already up by 18.8% when compared to fiscal 2020.

QRTEA currently trades at an extremely attractive price-earnings ratio of 4.02 while its forward price-earnings ratio also presents a great value at 8.76. Overall, Qurate Retail stock is undeniably undervalued at the moment, and QRTEA will likely continue seeing its valuation increase in the short-term at the very least.

Lastly, the security's Schaeffer's Volatility Scorecard (SVS) ranks at 70 out of a possible 100, implying the stock tends to outperform these volatility expectations -- a good thing for option buyers.