Roku stock appears expensive based on forward earnings and lack of bottom-line profits. However, when valuing the company on sales growth, it suggests a higher multiple is warranted. Despite a drop in stock price, Roku has seen impressive revenue growth, outpacing market darlings like Netflix and Meta Platforms.

While the stock may have been overvalued due to pandemic effects, Roku’s growth remains robust. Comparing it to other tech giants, Roku’s sales multiple is significantly lower, indicating potential undervaluation. The Motley Fool Stock Advisor team did not include Roku in their top 10 stock picks, highlighting other potential opportunities for investors.

For those considering investing in Roku, it’s important to look beyond the stock’s current valuation. Roku’s long-term growth prospects and profit strategy suggest it may be undervalued. The company’s revenue growth outpaces industry leaders, indicating potential for a higher sales multiple.

Anders Bylund holds positions in Netflix and Roku, while The Motley Fool recommends and has positions in Meta Platforms, Netflix, and Roku. The stock advisor’s historical returns have outperformed the S&P 500, offering insight into potential investment opportunities.

Read more at Yahoo Finance: Think Roku Stock Is Expensive? This Chart Might Change Your Mind.