Symbiotic Set to Report Q3 Earnings: Buy, Sell or Hold the Stock?

Symbotic Inc. SYM will report third-quarter fiscal 2025 results on Aug. 6, after market close.

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $535.6 million, indicating 8.9% year-over-year growth. The consensus estimate for total earnings is pinned at 4 cents per share, suggesting a more than 100% surge from the year-ago quarter’s actual. One estimate for the quarter has moved south in the past 60 days, versus no northward revision. There has been no change in analyst estimates or revisions lately.

SYM’s earnings surprise history is not impressive. In the four trailing quarters, it surpassed the Zacks Consensus Estimate twice and missed in the other two, with an average negative surprise of 72.1%.

SYM Showcases Lower Chances of Posting Q3 Earnings Beat

Our proven model does not conclusively predict an earnings beat for Symbiotic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

SYM has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Growing Backlog to Have Been SYM’s Driver in Q3

In the second quarter of 2025, the company had $22.7 billion in backlog. Management stated that the company expects to recognize nearly 11% of its remaining performance obligations as revenues in the next 12 months, 53% of its remaining performance obligations as revenues in the following 13-60 months, and the rest thereafter. We expect the top line to have been driven by converting this sizable backlog.

Symbiotic Stock Soars

SYM shares have skyrocketed 121.5% in a year, outperforming the 71.2% surge of its industry and the 20.8% rise of the Zacks S&P 500 composite. The company has performed better than its industry peers, Coherent Corp. COHR and MediaAlpha MAX. Coherent Corp surged 82.7%, while MediaAlpha declined 39.1% for the same period.

1-Year Price Performance

The SYM stock looks heavily priced compared with its industry. DOCU is currently trading at a trailing 12-month price-to-earnings ratio of 108.64X, higher than the industry’s 22.9X. Coherent Corp and MediaAlpha have price-to-earnings ratios of 21.68X and 12.83X, respectively.

P/E - F12M

Symbiotic’s Investment Considerations

In the second quarter of fiscal 2025, SYM’s deployment efficiency increased 30% year over year, which is a vital indicator for margin expansion in the near term. The company’s CFO stated that installation-to-acceptance timelines for new Phase 1 systems were two months shorter than historical averages, despite it being 15% larger. This suggests that labor hours per project and rework are declining, leading to higher profit margins.

Symbiotic generated $249 million in free cash flow in the second quarter of 2025, fueled by a favorable change in net working capital. That being said, the company’s current ratio stood at 1.02 in the quarter. Despite being lower than the industry’s 1.84, a current ratio of more than 1 implies that the company can easily pay off short-term obligations.

SYM’s partnership with Walmart has been very profitable, accounting for 87% of the company’s revenues. While we do not anticipate any threat soon, since Walmart has invested in Symbiotic, investors should be cautious about customer concentration risks. Additionally, the company neither pays dividends nor plans to, which weakens its appeal for income-focused investors.

Final Verdict

Symbiotic’s high backlog positions it to generate substantial revenues in the foreseeable future. We are optimistic about its margin expansion, driven by increased system deployment. Furthermore, a high free cash flow and a favorable current ratio hint at high liquidity, attracting investor attention.

However, the stock has soared over the past year and trades at a higher price, a red flag for investors. Given the lower chance of earnings beat, coupled with a lack of dividends, we recommend investors take a cautious approach and hold on to the stock for now. Potential buyers are urged to make a move after gauging the price movement post the earnings release.

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This article originally published on Zacks Investment Research (zacks.com).

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