Lyft vs. Uber: Which Stock is the Better Value Option for Investors?

In the fiercely competitive ride-hailing market, Lyft (LYFT) and Uber Technologies (UBER) have solidified their positions as industry leaders. Both companies have revolutionized urban transportation, providing users with convenient and affordable travel options. However, for investors, the question remains: which stock offers better value in today's market? To help you make an informed decision, this analysis dives into the financials, recent performance trends, risks, and overall outlook for both companies.

Overview

Lyft is currently trading at $12.83 per share, with a market capitalization of $5.26 billion. Despite its pivotal role in the U.S. ride-sharing market, Lyft has struggled in 2024. The company's stock carries a "Buy" rating and a total score of 3.92 out of 5, signaling mixed market sentiment. Its strengths lie in its attractive valuation, as it currently trades below its fair value. However, the company's financial health raises concerns, particularly with a forecasted decrease in earnings and continued losses in operations.

Uber, meanwhile, has a far larger footprint. Trading at $75.75 per share and boasting a market cap of $159.15 billion, Uber dwarfs Lyft in size and revenue. It also holds a "Buy" rating with a slightly higher total score of 4.07 out of 5. Uber's strengths are rooted in its projected earnings growth, solid investor confidence, and profitability. The stock is also trading below fair value, making it an appealing option for value-oriented investors.

Financial Performance

A deeper look into the financial metrics of both companies highlights the stark differences between the two.

Lyft generated $4.68 billion in revenue over the trailing twelve months (TTM), growing at a compounded annual growth rate (CAGR) of 6.9% over the past three years. However, the company has struggled to turn a profit, posting a gross profit of $1.93 billion but operating losses of $322 million. Furthermore, Lyft’s earnings-per-share (EPS) growth remains negative, reflecting its ongoing battle to achieve sustainable profitability.

Uber, on the other hand, reported a TTM revenue of $40.06 billion, growing at a much stronger CAGR of 12.1%. Its gross profit reached $15.72 billion, and unlike Lyft, Uber has achieved profitability, posting an operating income of $2.01 billion. The company also boasts positive EPS growth, a sign that Uber has successfully managed its cost structure and is capitalizing on its vast network of drivers and riders.

The financial comparison paints a clear picture: Uber is the stronger company, both in terms of revenue generation and profitability. While Lyft is still in the growth phase and battling operational challenges, Uber’s profitability and financial stability provide it with a significant edge.

Recent Performance and Trend Analysis

In the last ten weeks, Lyft has returned +3.97%, which slightly trails the S&P 500’s +4.24% return during the same period. Lyft saw a stronger performance over the past five weeks, delivering a return of +9.85%, significantly outpacing the S&P 500’s +1.84%. However, its one-week return of +0.86% suggests that Lyft’s recent momentum might be tapering off.

Uber has shown more consistent gains. Over the past ten weeks, Uber returned +12.54%, significantly outperforming both Lyft and the broader market. Over the last five weeks, Uber posted a +1.95% return, comparable to the S&P 500. Uber’s one-week return of +1.39% indicates solid short-term momentum, further highlighting its stronger position relative to Lyft.

While both stocks have experienced some gains in recent weeks, Uber’s consistent performance over the past three months suggests it is the more stable investment, whereas Lyft’s gains seem more sporadic and volatile.

Strengths and Risks

Both Lyft and Uber come with their own unique strengths and risks, but Uber’s strengths appear to offer more long-term value to investors, while Lyft continues to face near-term financial challenges.

Lyft’s primary strength lies in its valuation. The stock is currently trading below its fair value, making it an attractive option for value investors who are willing to bet on a potential turnaround. The stock’s recent performance, particularly its five-week return of +9.85%, also suggests that some short-term traders are starting to see opportunity in the company’s low price. However, Lyft’s ongoing profitability issues and negative EPS growth raise red flags. The company’s operating losses, coupled with a forecasted decline in earnings, suggest that Lyft will continue to face significant financial challenges in the coming quarters.

Uber, on the other hand, enjoys several key advantages. Its most significant strength is its earnings growth, which reflects the company’s ability to scale its operations and capitalize on its extensive global network. Uber also benefits from strong investor confidence, as evidenced by its consistent stock performance and positive analyst sentiment. Additionally, Uber’s profitability is a major factor in its favor. With an operating income of $2.01 billion, Uber has proven that it can not only grow but also generate positive cash flow, a critical element for long-term investors.

That said, Uber is not without risks. One potential concern for investors is the stock’s valuation premium. Uber is priced significantly higher than Lyft, and while it is trading below its fair value, the stock’s high price could deter more risk-averse investors. Uber also faces ongoing competition in the ride-hailing space, both from Lyft and smaller regional players, which could impact its market share in the future.

Future Outlook

Looking ahead, Uber’s future earnings potential positions it as the stronger long-term play. The company has already achieved profitability, and its earnings are expected to continue growing in the coming years. This places Uber in a far better financial position than Lyft, which is still struggling with losses and negative EPS growth.

Lyft’s future is less certain. While the company is growing its revenue, its ability to reach profitability remains in question. The company’s focus on the U.S. market limits its growth potential compared to Uber, which has a more diverse revenue stream across different geographies and business segments.

Conclusion: Which Stock is the Better Value?

After analyzing the financials, recent performance, and future outlook of both Lyft and Uber, it’s clear that Uber is the better value option for most investors. Uber’s profitability, consistent growth, and stronger financial position make it a more stable and promising investment for long-term capital appreciation. Lyft, while attractive for value-seeking investors due to its lower price, comes with significantly higher risks, including ongoing losses and uncertain earnings growth.

If you're looking for a stock with strong growth potential and profitability, Uber is the superior choice. Lyft may offer short-term opportunities for risk-tolerant investors, but Uber’s dominant market position and financial stability make it the better option for most.

LYFT Stock Analysis

Total Score

 

 

score

3.95

 

Strong Sell

Hold

Strong Buy

 

 

Risk Level

 

LOW

HIGH

 

LYFT has Low Risk Level. Click here to check what is your level of risk

In-depth stock analysis

Informed investment decisions

Stock market insights

Stock trading tips

Stocks trends

Stocks performance

Stocks analysis

Investment strategies

Trading strategies

StocksRunner updates

StocksRunner ideas

Financial Reports

Log In

Sign Up

Plans & Pricinig

Contact Us

Terms of use

Privacy Policy