Li Auto – A Comprehensive Analysis of the Stock

Now trading at a price of $26.32, Li Auto has moved -9.8% so far today.

Li Auto returned gains of 27.3% last year, with its stock price reaching a high of $47.33 and a low of $21.48. Over the same period, the stock outperformed the S&P 500 index by 6.0%. More recently, the company's 50-day average price was $33.63. Li Auto Inc. operates in the energy vehicle market in the People's Republic of China. Based in Beijing, China, the Large-Cap Consumer Discretionary company has 31,591 full time employees. Li Auto has not offered a dividend during the last year.

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%
Free Cash Flow (M) $378 $768 $327
CAPEX (M) $103 $541 $743
Total Debt (M) $78 $6 $57
Net Debt / EBITDA 24.19 -63.57 40.28
Current Ratio 7.28 4.33 2.45

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 suffers from declining EPS growth and positive cash flows.

The Market May Be Undervaluing Li Auto's Earnings and Assets:

Li Auto has a trailing twelve month P/E ratio of 22.0, compared to an average of 22.96 for the Consumer Discretionary sector. Based on its EPS guidance of $2.55, the company has a forward P/E ratio of 13.2. According to the 204.5% compound average growth rate of Li Auto's historical and projected earnings per share, the company's PEG ratio is 0.11. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 40.0%. On this basis, the company's PEG ratio is 0.55. This suggests that its shares are undervalued. Additionally, the market is possibly undervaluing Li Auto in terms of its equity because its P/B ratio is 0.43 whereas the sector average is 4.24.

Li Auto Has an Average Rating of Buy:

The 27 analysts following Li Auto have set target prices ranging from $34.99 to $82.39 per share, for an average of $51.34 with a buy rating. The company is trading -48.7% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

The largest shareholder is FMR, LLC, whose 1% stake in the company is worth $282,817,907.

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.