Why Symbotic Stock Skyrocketed on Tuesday

Shares of Symbotic (SYM 36.49%) charged sharply higher Tuesday, soaring as much as 39.9%. As of 10:50 a.m. ET, the stock was still up 31.75%.

The catalyst that sent the warehouse automation company surging was its robust financial report, which blew past even the most bullish expectations.

Why investors cheered Symbotic’s results

For its fiscal fourth quarter (ended Sept. 30), Symbotic generated record revenue that grew 61% year over year to $392 million. This soared past the high end of management’s guidance and analysts’ consensus estimates, which clocked in at $310 million and $299.7 million, respectively. For the full fiscal year, revenue of $1.18 billion jumped 98%.

Investors also cheered Symbotic’s improving bottom line, as the company generated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $13 million, swinging from a loss of $20 million in the prior-year quarter. This resulted in adjusted earnings per share (EPS) of $0.00 — or roughly breakeven. For context, analysts’ consensus estimates were calling for a loss of $0.01.

The company generated operating cash flow of $44.5 million, which suggests Symbotic is on the road to sustained generally accepted accounting principles (GAAP) profitability.

Helping fuel the strong results was GreenBox — the company’s joint venture with SoftBank — which was established just last quarter to use artificial intelligence (AI) to bring automated warehouse services to the supply chain.

Management expects its remarkable growth to continue, calling for fiscal first-quarter revenue of $360 million at the midpoint of its guidance, which would present year-over-year growth of 75%.

Is Symbotic stock a buy?

The excitement surrounding AI has helped fuel Symbotic’s rise this year, pushing the stock up more than 300% year to date (as of this writing). Surprisingly, however, Symbotic stock is still somewhat reasonably priced, at less than 2 times forward sales.

Retailers are looking for any advantage they can get, suggesting that demand for Symbotic’s warehouse automation systems will only increase from here. Investors with the stomach for significant volatility should consider buying a small position as part of a balanced portfolio.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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