AppLovin Corporation Fundamental Analysis (NASDAQ: APP)
AppLovin Corporation (NASDAQ: APP) shows moderate financial fundamentals with a PE ratio of 23.26, profit margin of 64.58%, and ROE of 1.93%. The company generates $6.8B in annual revenue with strong year-over-year growth of 69.99%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 88.9/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze APP's fundamental strength across five key dimensions:
Efficiency Score
ExcellentAPP demonstrates superior asset utilization.
Valuation Score
ExcellentAPP trades at attractive valuation levels.
Growth Score
ModerateAPP shows steady but slowing expansion.
Financial Health Score
ModerateAPP shows balanced financial health with some risks.
Profitability Score
ExcellentAPP achieves industry-leading margins.
Key Financial Metrics
Is APP Expensive or Cheap?
P/E Ratio
APP trades at 23.26 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, APP's PEG of 0.28 indicates potential undervaluation.
Price to Book
The market values AppLovin Corporation at 32.36 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 18.43 times EBITDA. This signals the market has high growth expectations.
How Well Does APP Make Money?
Net Profit Margin
For every $100 in sales, AppLovin Corporation keeps $64.58 as profit after all expenses.
Operating Margin
Core operations generate 77.44 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $1.93 in profit for every $100 of shareholder equity.
ROA
AppLovin Corporation generates $53.33 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
AppLovin Corporation generates strong operating cash flow of $4.52B, reflecting robust business health.
Free Cash Flow
AppLovin Corporation generates strong free cash flow of $4.49B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $13.37 in free cash annually.
FCF Yield
APP converts 4.40% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
23.26
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.28
vs 25 benchmark
P/B Ratio
Price to book value ratio
32.36
vs 25 benchmark
P/S Ratio
Price to sales ratio
14.96
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.11
vs 25 benchmark
Current Ratio
Current assets to current liabilities
4.30
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
1.93
vs 25 benchmark
ROA
Return on assets percentage
0.53
vs 25 benchmark
ROCE
Return on capital employed
0.75
vs 25 benchmark
How APP Stacks Against Its Sector Peers
| Metric | APP Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 23.26 | 34.40 | Better (Cheaper) |
| ROE | 193.10% | 730.00% | Weak |
| Net Margin | 64.58% | -3110.00% (disorted) | Strong |
| Debt/Equity | 1.11 | 0.22 | Weak (High Leverage) |
| Current Ratio | 4.30 | 6.05 | Strong Liquidity |
| ROA | 53.33% | 254.00% | Weak |
APP outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews AppLovin Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
139.63%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
1789.53%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
1030.38%
Industry Style: Growth, Innovation, High Beta
High Growth