LiveRamp trades at $33.32 and has moved in lockstep with the market. Its shares have returned 10.1% over the last six months while the S&P 500 has gained 5.3%.
Is now the time to buy LiveRamp, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is LiveRamp Not Exciting?
We don't have much confidence in LiveRamp. Here are three reasons why you should be careful with RAMP and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, LiveRamp grew its sales at a 12.1% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect LiveRamp’s revenue to rise by 8.4%, a deceleration versus This projection is underwhelming and indicates its products and services will see some demand headwinds.
3. Cash Flow Margin Set to Decline
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Over the next year, analysts predict LiveRamp’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 20.4% for the last 12 months will decrease to 16%.
Final Judgment
LiveRamp isn’t a terrible business, but it doesn’t pass our bar. That said, the stock currently trades at 2.7× forward price-to-sales (or $33.32 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now. Let us point you toward a top digital advertising platform riding the creator economy.
Stocks We Like More Than LiveRamp
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