Funko Inc (FNKO, Financial) saw its shares decline by 18.01% today, closing at $5.60 per share. This downturn follows the announcement of new "reciprocal tariffs" set by President Trump, impacting US imports with a minimum rate of 10%. Companies with substantial exposure to Asian markets, such as Funko, are particularly affected. The tariffs, which will include a 46% tariff on Vietnam and 49% and 32% tariffs on Cambodia and Indonesia respectively, pose a significant threat to growth and profitability.
In terms of financial health, Funko (FNKO, Financial) currently holds a market capitalization of $301.77 million with a Price-to-Book (PB) ratio of 1.27, close to its two-year low. Despite these challenges, the company has shown resilience in some areas. Notably, its Beneish M-Score suggests it is unlikely to be a financial manipulator, and insider buying activity over the last three months indicates some confidence within the company, with 15,000 shares purchased by insiders.
However, caution is advised for investors. Funko's Altman Z-score of 1.68 places it in the distress zone, indicating potential risk for bankruptcy within the next two years. Additionally, its Return on Invested Capital (ROIC) is lower than its Weighted Average Cost of Capital (WACC), suggesting inefficiencies in capital use. The company's Revenue per Share has also been on a decline over the past three years, pointing to potential issues in sustaining growth.
From a valuation perspective, the GF Value rating suggests that Funko is a "Possible Value Trap." The GF Value of $8.49, compared to the current stock price of $5.60, indicates a potential upside, but investors should proceed with caution given the financial warning signs. For more details on GF Value, click here.
Overall, while Funko (FNKO, Financial) has potential upsides, significant external and internal challenges persist. Investors looking at this stock should weigh these factors carefully before making investment decisions.
