Quick Update for NIO Investors

It hasn't been a great afternoon session for NIO investors, who have watched their shares sink by -3.8% to a price of $13.54. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

NIO Has an Attractive P/B Ratio but a Worrisome P/E Ratio:

NIO Inc. designs, develops, manufactures, and sells smart electric vehicles in China. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, NIO has a trailing 12 month P/E ratio of -8.2 and a P/B ratio of 1.14.

NIO has moved -32.0% over the last year compared to 8.0% for the S&P 500 — a difference of -40.0%. NIO has a 52 week high of $22.74 and a 52 week low of $7.0.

The Company Has a Positive Net Current Asset Value:

2019-04-02 2020-05-14 2021-04-06 2022-04-29
Revenue (MM) $4,951 $7,825 $16,258 $36,136
Gross Margins -5.2% -15.3% 11.5% 18.9%
Operating Margins -193.8% -141.6% -28.3% -12.4%
Net Margins -195.12% -144.24% -32.59% -11.03%
Net Income (MM) -$9,661 -$11,287 -$5,299 -$3,986
Net Interest Expense (MM) $10 -$210 -$259 $274
Depreciation & Amort. (MM) -$474 -$999 -$1,046 -$1,708
Earnings Per Share -$70.23 -$11.08 -$4.74 -$1.66
EPS Growth n/a 84.22% 57.22% 64.98%
Diluted Shares (MM) 332 1,030 1,183 1,779
Free Cash Flow (MM) -$5,268 -$7,015 $2,916 $6,044
Capital Expenditures (MM) -$2,644 -$1,707 -$965 -$4,078
Net Current Assets (MM) $1,477 -$14,476 $23,427 $18,821
Current Ratio 1.42 0.52 3.31 2.18
Long Term Debt (MM) $1,168 $7,155 $5,938 $9,739
LT Debt to Equity 0.14 -1.48 0.19 0.26

NIO has growing revenues and increasing reinvestment in the business, an excellent current ratio, and a strong EPS growth trend. However, the firm suffers from consistently negative margins with a positive growth rate and an unconvincing cash flow history. Finally, we note that NIO has similar gross margins to its peers.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.