Is This E-Commerce Stock Worthy of a Buy?

OSTK is up 46% in 2021 but is facing short-term chart pressure

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Last month, online retailer and cryptocurrency trailblazer Overstock.com, Inc. (NASDAQ:OSTK) announced a stock repurchase program of up to $100 million of its outstanding common stock. With that in mind, is OSTK perhaps worthy of a larger play?

The equity is up 46% in 2021, but is struggling with its year-over-year breakeven level. Since July, the shares have faced overhead pressure at their 200-day moving average. That trendline could be reclaimed through a short squeeze, considering a healthy 10% of OSTK's total available float is sold short.

OSTK Stock Chart

OSTK has a very attractive valuation at first glance, with a very low price-earnings ratio of 9.20. However, analysts have placed a forward price-earnings ratio of 24.94 on OSTK, meaning the company is expected to see decrease in earnings. Overstock also reported a 20% decline in annual revenues for fiscal 2019, making the e-commerce company's growth rate appear less reliable.

Nonetheless, Overstock.com has maintained strong bottom-line growth in recent years, adding about $530 million to net income since fiscal 2018. OSTK has also experienced solid long-term growth on the top-line, increasing revenues 66% since fiscal 2017. In addition, Overstock has a strong balance sheet with $536 million in cash and $58 million in total debt. Overall, the positives seem to outweigh the negatives for Overstock stock, making it a plausible long-term growth play at a good price.

 

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