Is it worth buying shares of Yandex and Ozone?

is heavily weighted in the world's major indices - 8.5% in the index . The historical correlation with other major techs is already driving the index down more than 1%. The index decline will pull other companies traded on Nasdaq with it. Among Russian companies, these are Ozon and Yandex.

Does this mean that the time of weakness has come for Russian techs, and Yandex is not worth buying now, at least? Nikolay Dudchenko, an independent financial analyst, answered the question posed by Fortrader magazine.

- Let's analyze the companies Ozon and Yandex to see if their shares are interesting to invest in. We first identify the company that is more interesting to invest in, and then build a discounted cash flow model for that company to get a rough estimate of fair value.

Let's pay attention to the capitalization of companies and the value of their assets.

As can be seen, Yandex's capitalization is 3.4 times the company's reported business value. Ozon's business value exceeds the value of its assets by 5.5 times.

Now let's look at what happens to company debt.

Both companies have a fairly stable debt load situation. The situation with Yandex looks more interesting - below.

The companies have demonstrated quite strong financial results over the last 3 years. Judging by revenue growth Ozon looks more attractive. Average revenue growth over 3 years was above 63%.

But the situation with net profit looks a bit different. Ozon is unprofitable - net profit is negative.

Let us now look at the price multiples of companies. Traditionally, we will consider three multiples - classic P/E; P/B and P/S

In the sector "Information technologies" P/E is 139.88; P/B is 14.42; P/S is 8.18. Thus, based on the comparative analysis we can conclude that the share prices of Ozon and Yandex are undervalued (but this is only in comparison with the shares of companies operating in the same sector as the companies we analyze).

Ozone is naturally negative due to negative net income. Yandex's 5-year average ROE is just above 13.5%, which is quite high.

Thus, according to key indicators, Yandex looks more interesting. Negative dynamics of Ozon's net profit is still a strong stop factor for investing.

According to the DCF model we built for Yandex, the net present value of the company amounted to 108.68 billion rubles. The terminal value of the company amounted to about 2.9 trillion rubles. Thus, according to the model, the company should be worth about 3 trillion rubles, which significantly exceeds the current capitalization of Yandex (1.8 trillion rubles) and makes the company's securities attractive for inclusion in the portfolio. This DCF model can be trusted only if the company's revenue growth rate remains at the same level. In my opinion, it still continues to be somewhat overvalued, so buying these securities may carry certain risks.