Symbotic's Premium Valuation: Buy, Hold or Sell the Stock Now?

Symbotic SYM is currently considered relatively overvalued, trading at a forward 12-month price-to-sales ratio of 10.62. The figure is higher than the Zacks Technology Services industry average of 3.27. It is also higher than industry peers, Coherent Corp. COHR and MediaAlpha MAX. Symbotic has a Value Score of F, while Coherent and MediaAlpha have a Value Score of C and A, respectively.

SYM’s P/S F12M vs. Industry, COHR & MAX

Image Source: Zacks Investment Research

The question with respect to SYM that naturally arises is whether it is worth overpaying for the technology services player? Let us delve deeper and analyze Symbotic’s fundamentals to answer the question.

Favorable Factors for SYM

Symbotic’s sizable backlog offers strong visibility into future revenue generation. In the third quarter of fiscal 2025, reported on Aug. 6, the company had a backlog of $22.4 billion. The company’s healthy positioning with respect to backlog drove the 26% year-over-year revenue growth in the third quarter of fiscal 2025. For the fourth quarter of fiscal 2025, Symbotic expects revenues in the $590-$610 million range and adjusted EBITDA in the $45-$49 million band.

The company also appears well placed to achieve margin expansion, aided by the steady pace of system deployments. Moreover, its solid free cash flow and favorable current ratio signal healthy liquidity.

SYM shares have gained in triple-digits over the past six months, outperforming its industry and fellow industry players Coherent and MediaAlpha.

6-Month Price Comparison

Headwinds That Cannot be Ignored

Technical indicators do not suggest continued strong performance for SYM. The stock trades below its 14-day moving average, which does not signal robust upward momentum and price stability. SYM has a  Momentum Score of F.

14-Day Moving Average Data of SYM Stock

SYM’s earnings surprise history is not impressive. In the trailing four quarters, it surpassed the Zacks Consensus Estimate twice and missed in the other two, with the average negative surprise being 78.3%.

Symbotic Price and EPS Surprise

Symbotic Inc. price-eps-surprise | Symbotic Inc. Quote

SYM’s overdependence on Walmart WMT raises concerns. The partnership with Walmart, SYM’s largest customer, accounts for a significant portion of SYM’s revenues. In January, Symbotic completed the acquisition of Walmart’s advanced systems and robotics business.

While we do not anticipate any threat soon, investors should be cautious about customer concentration risks. Furthermore, Symbotic does not currently distribute dividends and has no plans to initiate them, which makes the stock less attractive to income-oriented investors. The company also faces risks tied to its international expansion, particularly around adapting its technology to diverse operating environments and customer requirements. In addition, tariff-related economic uncertainty could weigh on Symbotic’s operations and financial performance in the future.

Symbotic is a Risky Investment Now

Based on the write-up, we can safely conclude that the company’s long-term outlook is strong and some investors may be willing to accept the premium. However, its current stock price already reflects a lot of this optimism. With the company facing certain risks, like reliance on a particular customer and challenges in scaling new technology, betting on the stock now might mean overpaying. The Wall Street average target price for Symbotic is $44.13, suggesting a 7% downside.

Despite the backlog-related optimism, SYM, currently carrying a Zacks Rank #5 (Strong Sell), looks like a stock to avoid rather than chase.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

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

Zacks Investment Research