Symbiotic Inc. (SYM – Free Report) shares have plunged 41.9% in a year against the 49.4% rally of its industry and the 16.5% rise in the Zacks S&P 500 Composite.
One-Year Price Performance
Image Source: Zacks Investment Research
The stock is trading below its 50-day moving average, indicating bearish sentiment among investors.
SYM’s performance underperforms its industry peers, Aurora Innovation, Inc. (AUR – Free Report) and Allot Ltd. (ALLT – Free Report) . AUR and ALLT shares have skyrocketed 175.6% and 172.9% in a year, respectively.
Given the fall in the Symbiotic stock, investors might be inclined to buy the dip. However, the vital question is whether this is the right time to invest in SYM. Let us delve into the details.
Acquisition Enhances SYM’s Backlog, Expands TAM
Symbiotic completed the acquisition of Walmart’s advanced systems and robotic business in January 2025. SYM will automate Walmart Accelerated Pickup and Delivery (APD) centers at the store level, with initial orders expanding across numerous stores. This presents a growth opportunity for the company, with store-fulfilled deliveries growing approximately 50% year over year, outpacing a run rate of $2.5 billion per month.
$200 million upfront and up to $350 million in contingent fees are the total consideration, which is dependent on the number of APD systems ordered by Walmart eventually. This agreement is expected to add more than $5 billion to Symbiotic’s backlog and enhance the company’s ability to address automated fulfillment of customer orders at the local and store level, expanding the total addressable market.
Strategic Expansion Aids Symbiotic’s Top Line
SYM has dipped its hands in the healthcare industry by acquiring OhmniLabs in December 2024. The acquired company is known for its autonomous disinfection and telepresence robots used in hospitals and other healthcare spaces. The goal of this deal is to combine Symbiotic’s expertise in large-scale automation with OhmniLab’s mobile robots, vision and AI solutions, enabling the development of top-notch automation innovations across different settings.
Symbiotic has expanded internationally by entering a commercial agreement with Walmex to deploy SYM’s warehouse automation systems in two of the retailer’s locations near Mexico City. We anticipate these expansion strategies to attract more customers, contributing to revenue growth.
SYM’s FY25 Top & Bottom-Line Prospects Look Strong
The Zacks Consensus Estimate for Symbiotic’s fiscal 2025 revenues is pegged at $2.3 billion, implying 21.9% year-over-year growth. The consensus estimate for SYM’s fiscal 2025 earnings stands at 25 cents per share, suggesting a more than 100% year-over-year increase.
Symbiotic’s Liquidity Position Lags Industry
In the first quarter of fiscal 2025, SYM’s current ratio of 1.22 underperformed the industry average of 2.21. Despite having a lower liquidity position than its industry, a current ratio of more than 1 suggests that the company will be able to pay off its short-term obligations easily.
Image Source: Zacks Investment Research
Steel Prices to Affect SYM’s ROI
A significant chunk of the company’s cost of goods sold is steel prices. There are pass-through clauses in most of the steel contracts drawn by the company, which enable it to recover the cost of steel from customers. Management aims to find a shorter return once they are on contract, which allows them to adjust the prices charged to their customers to reflect changes in the price of steel.
However, passing the rising price to customers in case of any additional tariff on steel will increase the total project cost for the retailers, hurting the return on investment.
Symbiotic Stock Looks Expensive
The SYM stock is currently expensive and might not be appealing to investors due to an overvaluation. It is priced at 67.5 times forward 12-month earnings per share, which is higher than the industry’s average of 39.8 times.
Image Source: Zacks Investment Research
Analyzing the Right Entry Point for SYM
Despite the fall that Symbiotic shares have experienced over the past year, its long-term prospects look solid under the garb of its acquisitions, strategic expansion, and strong top and bottom-line outlooks.
However, the dip in prices should not be a sign to jump on the bandwagon. Rather, a cautious approach is recommended. We suggest potential investors wait for further adjustments in the SYM stock to find the right entry point.
Symbiotic carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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