Angi Inc. ANGI stock has lost 24.1% year to date, underperforming the Zacks Computer and Technology sector’s growth of 31.8%. However, the home services marketplace leader is showing promising signs of a successful strategic transformation. The company's focus on customer experience and operational efficiency presents an attractive entry point for long-term investors.
Year-to-date Performance
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Impressive Operational Improvements
Angi's commitment to enhancing customer experience is yielding tangible results, with jobs done well rate increasing 30% over the past year. The company has achieved a remarkable 60% year-over-year improvement in Homeowner NPS in the latest quarter, indicating strong customer satisfaction. These metrics, coupled with rising pro-retention rates, suggest the company's strategic initiatives are gaining traction.
Yelp YELP and Alphabet GOOGL-owned Google Local Services offer similar home service provider listings and reviews. TaskRabbit, owned by IKEA, competes in the handyman and small tasks segment.
Financial Resilience Amid Transformation
Despite revenue headwinds, Angi demonstrates robust financial health with operating income increasing to $7.8 million in third-quarter 2024, a significant improvement from the previous year. The company's adjusted EBITDA grew 27% to $35.4 million, while year-to-date operating income reached $20 million with adjusted EBITDA rising 47% to $114 million, showcasing effective cost management and improving operational efficiency.
The Zacks Consensus Estimate for 2024 is pegged at $1.18 billion, indicating a year-over-year decline of 1.5%. The consensus mark for 2024 earnings is pegged at 8 cents per share. The earnings estimates have moved north by 700% over the past 30 days, indicating optimism.
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Strong Cash Flow and Liquidity Position
Angi maintains a solid financial foundation with $395 million in cash and cash equivalents. The company's free cash flow increased $29.2 million to $78.4 million for the first nine months of 2024, demonstrating strong cash generation capabilities. This financial flexibility enables continued investment in growth initiatives while maintaining operational stability.
Strategic Evolution Toward Consumer Choice
The company's transition to a consumer choice model, already successful in its European operations, positions Angi to capture greater market share. This strategic shift, aligned with upcoming FCC regulations, demonstrates forward-thinking leadership and the potential for improved customer experience and retention rates.
Investment Thesis
Several factors make Angi an attractive investment opportunity, including successful operational improvements with significant increases in customer satisfaction metrics, a strong financial position with growing profitability despite revenue transitions, proven success of the consumer choice model in European markets and a focused management team committed to long-term value creation.
The current stock price decline appears to overlook these fundamental improvements and long-term growth potential. With monetized transactions per service request increasing 26% to 1.53 and international revenues growing 9%, Angi shows promising signs of execution on its strategic initiatives.
ANGI trades at a discount with a forward 12-month P/S ratio of 0.83x compared with the Zacks Internet - Content industry average of 10.88x.
ANGI’s P/S F12M Ratio Depicts Discounted Valuation
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Conclusion
Looking ahead, management's confidence in maintaining profitability through 2025 while investing in customer experience enhancements suggests a well-planned path to sustainable growth. For investors willing to look beyond short-term revenue fluctuations, the current price levels may offer an attractive entry point into a company positioned for long-term success in the massive home services market. ANGI stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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