Roku’s 19.5% return over the past six months has outpaced the S&P 500 by 14.7%, and its stock price has climbed to $117.48 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy ROKU? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Is ROKU a Good Business?
With a name meaning six in Japanese because it was the founder's sixth company that he started, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
1. Total Hours Streamed Skyrocket, Fueling Growth Opportunities
As a subscription-based app, Roku generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Roku’s total hours streamed, a key performance metric for the company, increased annually to 37.9 billion in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.
2. Eye-Popping Growth in Customer Spending
Average revenue per request (ARPR) is a critical metric to track because it measures how much the average request spends. ARPR is also a key indicator of how valuable its requests are (and can be over time).
Roku’s ARPR growth has been exceptional over the last two years. Its ability to increase monetization while growing its total hours streamed at an impressive rate reflects the strength of its platform, as its requests are spending significantly more than last year.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Roku’s margin expanded by 14.9 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Roku’s free cash flow margin for the trailing 12 months was 10.1%.
Final Judgment
These are just a few reasons why Roku ranks highly on our list, and with its shares topping the market in recent months, the stock trades at 24.1× forward EV/EBITDA (or $117.48 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Roku
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
