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Nio (NYSE:NIO) is now above $50 per share and at the level where I put its target value in my last article on June 9. As a result, I decided to take another look at Nio stock. I found that it is still worth considerably more than its present price of $50.40, as of July 2.
NIO) display room at night." width="300" height="169">Source: Robert Way / Shutterstock.com
One reason is that on July 1 Nio provided its June monthly and full Q2 delivery figures. For example, the company delivered the most electric vehicles (EVs) in its history with 8,083 deliveries in June. This was 116.1% more than last year, but more importantly, it was also 20.1% above May’s deliveries.
Moreover, Nio also delivered 21,896 EVs during Q2, which was 111.9% over last year. But on a quarter-over-quarter basis, the deliveries were 9.2% above Q1’s 20,060 EV deliveries. In other words, the company is still on a clear growth trajectory. You can see this in the table on the right that I have put together.
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Source: Mark R. Hake, CFA
This might have been in question up until recently. For example, you can see in the table that deliveries in April and May were down sequentially. But June’s whopping 20% gain more than made up for those shortfalls.
Moreover, this leads me to estimate Nio’s full-year 2021 deliveries and revenue. Based on these numbers I estimate that the company will deliver 92,800 EVs this year. This will be 112% higher than last year’s 43,728 EV deliveries.
In addition, depending on the actual revenue it produces for Q2, Nio will have sales of $5.665 billion for 2021. That will be 143.5% over last year’s $2.327 billion in sales.
At this rate, sales will easily hit $8.83 billion by the next of next year (i.e., up 55.9%). This is what analysts surveyed by Seeking Alpha forecast for the company.
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Source: Mark R. Hake, CFA
More importantly by 2023, the company could reach profitability according to those analysts. They estimate 27 cents in earnings per share (EPS) by 2023.
What Nio Stock Is Worth
That would put NIO stock on a forward price-to-earnings (P/E) multiple of over 186 times earnings. Assuming EPS doubles over the next 2 years, the P/E would fall to a more normal 47 times. So, in effect, Nio stock does not seem to be out of touch with reality here.
Moreover, if we compare the price-to-sales (P/S) multiple to Tesla (NASDAQ:TSLA), Nio definitely seems too cheap. Tesla is its main rival in China in the sale of EVs. TSLA stock trades for 9.87 times its 2022 sales forecast, according to Seeking Alpha ($102.5 billion). In addition, at $655 billion in market value, Tesla is 7.95 times its 2023 forecast of $82.4 billion in sales.
If we apply those multiples to Nio the estimate is $87.2 billion (i.e., 9.87 x $8.83 billion). That is about the same as July 2’s market value of $87.17 billion. In addition, using the 2023 forecast of $12.85 billion in sales, using the Tesla multiple of 7.95 times, the market value will be $102.16 billion. This is 17.3% higher than July 2’s price.
As a result, the implication is that Nio stock should be at $59.12 per share (i.e., 1.173 x $50.40). This is also close to what 22 Wall Street analysts say Nio stock is worth. Seeking Alpha’s survey of analysts shows that their average target price is $60.42 per share or 20% over July 2’s price.
So, look for Nio stock to continue to move higher as analysts upgrade their forecasts, especially when the company comes out with its Q2 earnings release.
On the date of publication, Mark R. Hake did not hold a position in any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
