Roku Inc. Class A Common Stock (ROKU)

FairStock Score: 31/100 — RISKY

Key Financials

Strengths

• Generates $661 million in annual free cash flow (3.9% yield on market cap)
• Strong Piotroski F-Score of 8/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Conservative balance sheet with debt-to-equity of just 0.20, providing financial flexibility
• Altman Z-Score of 6.2 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 16.1% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($15) with negative 638% margin of safety—limited downside protection

AI Analysis

Roku Inc. Class A Common Stock is a mid-cap communication services company valued at $16.8 billion. The business generates $4.7 billion in annual revenue with a 1.7% net margin and $661 million in free cash flow. From a quality standpoint, Roku shows near-perfect Piotroski F-Score of 8/9 indicating exceptional financial health and Altman Z-Score of 6.2 confirms fortress-level solvency. On valuation, the stock is commanding a steep 194.8x multiple, with trades far above its Graham Number ($15) with no margin of safety. Growth dynamics show revenue growing at 16.1% and profit growth of 326.4%. Our composite FairStock Score of 31/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Roku's 16% revenue growth trajectory could accelerate as it captures additional market share in the communication services sector. With $661 million in annual free cash flow (3.9% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 195x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer