Uber Technologies (UBER): A Bullish Bet Ahead of Earnings?

As Uber Technologies (UBER) prepares for its upcoming earnings release, investors are scrutinizing recent developments to determine whether the stock offers compelling near-term upside. With upward revisions to earnings estimates, a favorable Zacks Rank, and valuation metrics suggesting undervaluation relative to peers, UBER appears positioned to deliver gains—if its performance aligns with analyst expectations. Let's dissect the data.

Earnings Momentum: Analysts Are Getting Bullish

Recent earnings estimate revisions highlight growing confidence in Uber's financial trajectory. For Q2 2025, analysts project gross bookings of $45.75B to $47.25B, a 16-20% year-over-year increase on a constant-currency basis. Adjusted EBITDA is expected to hit $2.02B to $2.12B, up 29-35% YoY. These figures reflect Uber's operational resilience amid macroeconomic challenges, driven by its diversified services in ride-hailing, food delivery, and freight logistics.

The full-year 2025 outlook remains robust, with EPS projected at $2.90 on revenues of $50.69B—a 15% revenue growth despite a 36.4% dip in EPS due to prior-year comparables. For 2026, estimates show a sharp rebound, with EPS growth of 21.82% to $3.53. This trajectory aligns with Uber's strategic moves, including cost-efficient autonomous vehicle (AV) partnerships and AI-driven logistics optimization, which reduce R&D burdens while enhancing market share.

Zacks Rank #2 (Buy) and a Growth Score of A underscore the positive momentum. The company's $2.25B free cash flow in Q1 2025 (up 66.6% YoY) and a $7B share buyback program further reinforce its financial health, making it a standout in a sector grappling with regulatory and cost pressures.

Valuation: A Discounted Growth Play?

While UBER's valuation metrics reflect its growth trajectory, they also hint at potential undervaluation relative to peers. As of April 2025, its EV/EBITDA ratio was 44.91, down 6.23% from its 12-month average of 47.90 but 36.23% above its 5-year average of 32.97. This metric, which accounts for debt and cash, is critical for assessing enterprise value.

Comparisons to peers reveal an intriguing advantage. Competitors like Grab (GRAB) and Lyft (LYFT) carry EV/EBITDA ratios of 130.21 and 123.41, respectively, while Avis Budget (CAR) and Hertz (HTZ) trade at 5.77 and 5.80. Uber's position in the bottom 10% of its sector by EV/EBITDA suggests it is undervalued relative to high-growth peers, even as its multiple remains elevated versus traditional auto-rental firms.

Other metrics support this thesis:
- Trailing P/E: 14.97 (vs. a 5-year average of 43.3)
- Forward P/E: 25.70 (reflecting 2025's lower EPS but 2026's growth)
- Price-to-Sales: 4.05, reasonable for a company with 15%+ revenue growth.

Despite the EV/EBITDA premium over its historical average, Uber's $7.2B cash reserve and $157.4B market cap provide a buffer against volatility, while its buyback program signals confidence in its valuation.

Investment Considerations: The Risks and the Reward

Why Buy Ahead of Earnings?
1. Earnings Catalyst: Positive Q2 results could validate analyst upgrades and trigger a multiple expansion.
2. Sector Outperformance: Uber's EV/EBITDA is far more attractive than high-multiple peers like GRAB, which face regional headwinds.
3. Strategic Leverage: Autonomous vehicle partnerships and AI-driven efficiency gains position Uber to dominate in cost-sensitive markets.

Risks to Consider
- Regulatory Headwinds: Gig-worker classification disputes could elevate labor costs.
- Valuation Sensitivity: A miss on earnings could pressure the stock, given its forward P/E of 25.7.

Conclusion: The Case for a Strategic Buy

Uber's upward earnings revisions, strong cash flow, and favorable Zacks Rank create a compelling case for a near-term buy, especially if Q2 results beat consensus. While its valuation is elevated relative to its 5-year average, its position within its sector—particularly versus peers like GRAB and LYFT—suggests it remains undervalued.

Investors should prioritize a gradual entry, using the earnings release as a catalyst to add positions if metrics like gross bookings and EBITDA meet or exceed expectations. The $7B buyback program adds a floor to downside risk, making UBER a growth-oriented pick with asymmetric upside potential.

Final Take: UBER is a buy ahead of earnings, provided investors accept the risk of a valuation reset if results disappoint. For those focused on long-term growth, the stock's strategic moves and undervaluation relative to peers justify a bullish stance.