It hasn't been a great morning session for Li Auto investors, who have watched their shares sink by -3.8% to a price of $29.87. 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.
Li Auto Has Attractive P/B and P/E Ratios:
Li Auto Inc., through its subsidiaries, operates in the energy vehicle market in the People's Republic of China. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Li Auto has a trailing 12 month P/E ratio of 19.4 and a P/B ratio of 0.49.
Li Auto's PEG ratio is 45.45, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Wider Gross Margins Than the Industry Average of 14.7%:
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue (M) | $1,449 | $4,238 | $6,566 |
| Gross Margins | 16% | 21% | 19% |
| Net Margins | -2% | -1% | -4% |
| Net Income (M) | -$23 | -$50 | -$295 |
| Net Interest Expense (M) | $10 | $29 | $91 |
| Depreciation & Amort. (M) | $49 | $93 | $176 |
| Diluted Shares (M) | 870 | 1,853 | 1,941 |
| Earnings Per Share | -$0.03 | -$0.03 | -$0.15 |
| EPS Growth | n/a | 0.0% | -400.0% |
| CAPEX (M) | $103 | $541 | $743 |
Li Auto has rapidly growing revenues and increasing reinvestment in the business, an excellent current ratio of 2.45, and wider gross margins than its peer group. However, the firm has declining EPS growth.
