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Most stocks had a great year in 2025 and Uber was no exception climbing more than 30%. But actually over the last 6 months it's been on a bit of a pullback around 12% and today the stock sits roughly around the mid to uptrend of the 52- week range and we can see it topped out around the $12 mark. Look despite that weakness we can see that corn has given it a strong buy rating.
Wall Street near the strong buy of four and a half as well as a respectable buy from Seeking Alpha. So the big question becomes, is this still a high growth stock you should buy now for massive gains in 2026 and beyond? And let's break that down. The first thing we do want to mention is if you remember last year, this was one that Bill Aman added as a new position in his portfolio.
And we can see today from his latest portfolio allocation that Uber in fact is his largest position where it sits at the 20% mark. On top of that, he was asked just days ago about his thesis with Uber whether it still remains. And as you can see, he said yes, it is incredibly cheap. In fact, if we take a look at it on an EV to free cash flow basis, it's trading at its lowest levels.
And in fact, we can see over the last few years, this one looks to be getting cheaper and cheaper. We'll also point out what his overall investment thesis was in the company. He says that their business model has strong network effects that reinforce supply and demand growth. He talks about the management team as a whole, talks about the CEO, how in fact they are very strong in terms of their operational discipline and capital allocation and more importantly believers that management can execute on the 30% annual EPS growth over the next few years as well as revenue around the mid to high teens.
Share purchase as well which we will touch upon briefly shortly and when he was talking about this it was trading at a forward P of 29. is actually lower than that now for pretty much the same reasons that he mentioned a year ago. Concerns regarding the potential long-term threat from autonomous vehicles.
So, in his conclusion, he believes the long-term risk from AVs is limited and estimates that Uber's share price is likely to more than double over the next 3 to four years. He's not the only one that believes this is a strong company to consider in 2026. RBC Capital just a few weeks ago reaffirmed their outperforming rating on the company.
$110 was their target price. In fact, they also have this as one of their top AI picks for 2026. And again, other analysts here reaffirming this company looking strong for 2026 and one giving it a $130 target. We have Bank of America just yesterday reiterating their buy rating 119. And actually interesting to see from a few days ago there was a downgrade from Medius for the autonomous vehicle competition which actually something we just saw Bill Aman says he believes is a little bit overreached and that is wherein the opportunity lies.
Also fascinating to see that the person that did give the downgrade as you can note doesn't look to have a very strong success rate and one of the poorer analysts who does get tracked. Having said all of that, they've actually dropped it to around a $73 price target. And whilst we saw the share price come down after this downgrade, it was very strong in the last day, up 56% where they say that AVs could potentially impact Uber's market position.
And even though the valuation, as we will get on to shortly, through a discounted cash flow model does appear to be cheap. That is in fact they say without factoring in the competitive threats that could emerge. Now just look at their latest quarter. We can see their numbers were very strong. Profit revenue all up.
They also last year announced a $20 billion share buyback program. And if we just look at those numbers from the latest quarter well revenue was up 20% yearonear. Largest driver of this was actually Uber Eats delivery that was up 29%. Not to say anything negative about mobility which is their largest income driver that was also up 20%.
And as we can see, other metrics like their trips, monthly active users, gross bookings, all up in strong regard. Now, bear in mind over the next four quarters, EPS estimates aren't looking to be that strong. The one caveat we would say though is over the last four quarters, they've outperformed on every single one.
Two of them saw some absolutely phenomenal beats. And whilst we do see a decrease in EPS from 25 to 26, there is a fairly strong chance that they will blow through these numbers. Having said all of that though for P currently sits around the 23 24 mark and that was as we saw cheaper than when Bill Aman introduced his thesis it was sitting around 29 and overall the metrics for the company look strong.
The active platform users continues to climb up 10% every single year over the last five. Free cash flow from since it has gone positive. That trend continues. We can see in the latest quarter the upward momentum is still there sitting at 8.7 billion. And if you want to compare Uber delivery, this is specifically that delivery segment, which isn't their main income stream, against the likes of Door Dash, you will notice Uber actually does sit below and is growing slower, but still very respectable at 34%.
Currently, Door Dash does sit higher and is growing faster at 49. However, and this is fairly important, when we look at total trips, also includes Door Dash, but as well, we've included Lyft. We can see that no one comes anywhere near to Uber. not only massive in terms of the comparison on the numerical rate but also growing faster 23% on an annual basis where we see Door Dash at 21 and Lyft sitting at 18 and their bookings are also increasing.
We can see over the last few quarters we're actually noticing a very strong trend that we don't typically see is actually been getting larger and larger. In fact, 21% in Q3 2025. If you want to look at the same in Q3 24 well 16% so now it's sitting a few percentage points higher also higher than the last four quarters.
So it doesn't look like the growth is slowing down anytime soon even taking into consideration a lot of the fear that is being put out about autonomous vehicles and how it's going to harm the company. And if you just want to get a generalized view well firstly revenue was up 18% in their last full accounting period.
Every single income stream growing very strongly. The standout one being freight, which is actually their smallest income stream, growing at 75% every single year. And we also see their monthly active platform users going in the only direction investors want to see. Don't forget as well, last year their partnership with Nvidia where they call this a pivotal step to scaling global autonomy.
We can see the end goal is to have joint AV data factory as well as more Uber ready autonomous vehicles to market. Remember though, the question many investors are asking is whether AVs will really harm this company. In fact, we have investors on one side of the fence saying yes and others on the other side like Bill Aman saying no and putting his money where his mouth is.
As we said, 20% of his overall portfolio. What are the institutions doing? Well, they have 81% ownership. They sold 23 billion in the last 12 months. They bought more at around the 30 billion rate. And whilst we haven't got the full data set just yet for quarter 4, as of now they continue to buy more in the most recent quarter.
In fact, if we go back all the way to 2022, institutions more often than not are net buyers of this company rather than net sellers. They currently don't see any issues with AV eroding the continued strong growth from Uber. And whilst we always say insider selling isn't a bearish signal, we want to show for consistency.
The ownership sits at 4% around 70 million worth of selling in the last year. Barely any buying and we can note nothing in quarter 1. The substantial amount was in Q3. Again, information is here if you want to include it in your overall investment thesis, but we would say not a bearish signal. Then we have their underlining metrics.
We already pointed out their free cash flow growth going from negative to positive and expected to continue over the next 12 months. If we look at their sales growth as well, double digit, very strong bar COVID, which is completely understandable and justified, 18% in 2024. And we can also see their sales climbing, which we will briefly touch upon.
But do notice one thing that they dilute your position as a shareholder. They have been doing this over the last 10 years. You probably won't care if they manage to outperform the S&P. And also worth mentioning as we pointed out they did last year announce a fairly large share buyback program. ROIC looking strong in the last few years as it has gone from negative to positive trend is also in the right direction.
Remember here we want to see a minimum of 10% to keep up in line with inflation and margin since turning positive whilst it is fairly trivial. We do want to see this in the double digit rate. That is where currently directionally it looks like it's going. And the same thing to be said about the free cash flow margin, which today sits at 18% on a trailing 12-month basis.
Finally, we get to the net debt to EBIT Dar, which remember correlates to balance sheet strength. We want below three as these are the number of years it would take them to pay off all of their debt net of cash on hand. Peaked in 2022. Since then, it's been coming down 0.5 on a trading to a month, 39 over the next year.
So, very strong signal for the company's health overall. And if you wanted to look at their valuation grading where they do get a seat, you're actually getting a double-digit discount against the sector as well as a 60% discount to their 5year average. If you want to look at a price to earnings growth, well, as we always say, below one could be a screaming buy if your investment thesis holds 37 that is incredibly cheap.
But remember, we don't look at this in isolation. Sector sitting around the two mark. So you're looking today at an 81% discount for which their growth also comes in strong. We get an A. Last year it was up 18% expected 17 this year. Still well above the single digit of the sector. But actually like most growth companies today they're growing slower than they have done historically.
We should mention their earnings per share which looks incredibly strong from analyst predictions over the next 3 to 5 37% when the sector sits much lower at the 12 mark. And profitability coming in very strong as well. 34% gross margin above the sector at 31. Slightly higher than their 5year at 33.9.
Bottom line 34% that is incredibly strong. That tells us this company can function operationally very very well given their gross margin is in essence not too dissimilar from their bottom line. Also significantly above the sector at six. And we know no surprises given we just ran through their data.
Even at a high level over the last five on average it is sitting -7. So operational efficiencies we love to see that as well as the cash they're generating from operations 9 billion in the last year much much higher than their 5year average at 2.4. And if you want to compare their performance over the last year against the S&P and the QQQ well Uber has outperformed on both accounts which is great to see.
And that also holds true when we look at the last three years. Uber has been one that has outperformed. But as always, past performance isn't an indicator of the future. Just because they've done well in the last three doesn't mean they will do moving forwards. And as we highlighted, their revenue has been growing at a very attractive rate.
4 billion 10 years ago, now sitting at 44, trading 12 months, highlighting growth is expected to continue by the end of the accounts for 2025. As always, we don't just look at revenue. We want to understand what does the story of consistency show us by looking at their net income and in all honesty it is very very inconsistent.
The only thing we would say is in 2023 and 2024 we see nice growth in between the years based on December 2025 it's likely that is expected to continue. So the trend at least now seems to be moving in the right direction but definitely something to keep an eye on. And finally we do a quick health check.
total cash versus total debt where cash has gone from 6 billion now sitting at 9. So a rough increase of 50% but as always we never look at one number in pure isolation. We want to compare it to their total debt both numerically and directionally and that's also increased. we see it around 3 billion 10 years ago now sitting at 13 makes sense why the net debt to EBIT Dar was sitting around the.5 rate tells us balance sheet at a high level does look to be fairly strong and if you enjoy these types of analysis where we release one free weekly article every single Monday morning to your inbox covering severely undervalued stocks as well as what's going in the market over the last few days.
So click below, you can sign up and read straight away where you'll also be able to grab a spreadsheet of severely undervalued stocks for the month of January. Lots of information for each one, the upside that Wall Street themselves see over the next year. And on top of that, you can grab a spreadsheet of stocks that Wall Street themselves believe have the most upside in the S&P for 2026.
So click below, you can sign up and read straight away. Now, intrinsic value for Uber gets to $126 derived from the discount and cash flow model. We'll just highlight here that we've used a growth rate of 12%. Their three-year KGA is 320%. Although bear in mind time frame is very short if we were to use the last 9 years.
Well, it would in fact be negative as it only recently turned positive in 2022. So bear that in mind. We've also used the lower end of analyst estimates for 2025's full year of future free cash flow. They estimate it between 7 to 11 billion. So, one way we have been conservative straight off the bat.
Remember, as always, the low, med, and high, which for Uber today sits at 8, 12, and 16 respectively, is subjective. You can always grab a copy of this model by clicking on the pin comment below, running through your own numbers, Uber, or any others. But with us using a 12% rate, you can already see perhaps severe undervaluation because baked in today at the market price of $86 is 6% moving forwards, which if you believe is going to be much higher than straightaway undervalued potentially.
If you believe actually Uber's free cash flow growth will be a lot slower than 6% then maybe overvalued. But most people will argue 6% is fairly low is conservative. We have also used, as we said, the conservative level for 2025, and 12% doesn't seem unreasonable, giving upside of 47%. That also lets us know you're getting a 32% margin of safety today, where typically we would say a bare minimum of 10% if it met our three golden criteria, wide moat, strong financial metrics, good forward-looking data.
For Uber, we see 32%. Wall Street also on average estimate $117 into next year, that's 36% upside. But if you wanted to be a little bit more conservative and use a growth rate of 8%, which we would say is very low, then you're still seeing margin of safety, which arrives at 12% today. For those that believe we're being too conservative and want to use 16%, again, some could argue that is still fairly reasonable.
That in turn leads to a huge MOS at 47%. Now look, let us know your overall views on the company. We're at our middle rate. You are looking at a 32% MOS. Is Uber in your views one that will be really affected by autonomous vehicles? Will the company collapse? Maybe their earnings will start to erode or in fact you see it as a benefactor with their network, with their partnerships, and this is one that could ultimately be a great buy for 2026.
Let us know in the comments. Do you see Uber as a buy hold or maybe one to completely avoid? And don't forget, as always, to sign up to the free weekly newsletter, grab those spreadsheets, come and join us at Patreon where we cover our buys and sells. And as always, have a great day. We'll see you all on the next
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