Is Nio’s stock overvalued or undervalued?

Is Nio’s stock overvalued or undervalued?

The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is about 1. Once again, without positive earnings, Nio doesn’t have a positive PEG ratio to use as a valuation gauge. Yet when it comes to evaluating a stock, earnings aren’t everything. Price-to-sales ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is 3.14, well above its long-term average of 1.62. Nio’s PS ratio is 13.6, more than four times higher than the S&P 500 average. Nio’s PS ratio is also up 840.2% over the last two years, suggesting the stock is still priced at the high end of its historical valuation range.

Related Link: Is GoPro’s Stock Overvalued Or Undervalued? For comparison, the S&P 500’s PE is currently at about 34, more than double its long-term average of 15.9. Nio doesn’t currently have a PE ratio because the company is not profitable. In the most recent quarter, Nio reported a net loss of $659.2 million.

Growth: Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 20.3. Unfortunately, analysts are not expecting Nio to turn a profit over the next four quarters. The current consensus earnings per share estimate for Nio for 2022 is a 12-cent loss. Nio’s consumer discretionary sector peers are currently averaging a 29.5 forward earnings multiple. Earnings: A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value.

See more from Benzinga © 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. The Verdict: At today’s price, Nio stock appears to be extremely overvalued based on a sampling of common fundamental valuation metrics.

Finally, Wall Street analysts do see value in Nio stock over the next 12 months. The average analyst price target among the 21 analysts covering Nio is $58.25, suggesting about 60.7% upside from current levels. Story continues

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