Sea Limited American Depositary Shares each representing one Class A Ordinary Share (SE)

FairStock Score: 45/100 — MIXED

Key Financials

Strengths

• Generates $511 million in annual free cash flow (1.0% yield on market cap)
• Strong Piotroski F-Score of 8/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 15.3% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.27, providing financial flexibility
• Revenue growth of 38.4% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($34) with negative 142% margin of safety—limited downside protection

AI Analysis

Sea Limited American Depositary Shares each representing one Class A Ordinary Share is a large-cap consumer cyclical company valued at $50.6 billion. The business generates $22.9 billion in annual revenue with a 1.7% net margin and $511 million in free cash flow. From a quality standpoint, Sea shows near-perfect Piotroski F-Score of 8/9 indicating exceptional financial health and Altman Z-Score of 2.1 in the grey zone. On valuation, the stock is trading at a premium 33.1x earnings, with trades far above its Graham Number ($34) with no margin of safety. Growth dynamics show revenue growing at 38.4% and profit growth of 67.3%. Our composite FairStock Score of 52/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Sea's 38% revenue growth trajectory could accelerate as it captures additional market share in the consumer cyclical sector. With $511 million in annual free cash flow (1.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 33x 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