Stock Analysis: Decent Value Stocks

Fundamental Rating

Overall LI gets a fundamental rating of 6 out of 10. We evaluated LI against 38 industry peers in the Automobiles industry. LI has an average financial health and profitability rating. LI is growing strongly while it also seems undervalued. This is an interesting combination These ratings could make LI a good candidate for value and growth investing.

1. Profitability

1.1 Basic Checks

LI had positive earnings in the past year.

LI had a positive operating cash flow in the past year.

In the past 5 years LI reported 4 times negative net income.

LI had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

LI has a better Return On Assets (8.16%) than 86.49% of its industry peers.

LI's Return On Equity of 19.46% is amongst the best of the industry. LI outperforms 83.78% of its industry peers.

Looking at the Return On Invested Capital, with a value of 6.24%, LI belongs to the top of the industry, outperforming 81.08% of the companies in the same industry.

		Industry Rank	Sector Rank
ROA	8.16%
ROE	19.46%
ROIC	6.24%

ROA(3y)1.77%

ROA(5y)N/A

ROE(3y)4.73%

ROE(5y)N/A

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

The Profit Margin of LI (9.45%) is better than 86.49% of its industry peers.

The Operating Margin of LI (5.98%) is better than 72.97% of its industry peers.

LI has a Gross Margin of 22.20%. This is amongst the best in the industry. LI outperforms 83.78% of its industry peers.

In the last couple of years the Gross Margin of LI has grown nicely.

		Industry Rank	Sector Rank
OM	5.98%
PM (TTM)	9.45%
GM	22.2%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y10.66%

GM growth 5YN/A

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so LI is destroying value.

Compared to 1 year ago, LI has more shares outstanding

LI has a worse debt/assets ratio than last year.

2.2 Solvency

LI has an Altman-Z score of 2.53. This is not the best score and indicates that LI is in the grey zone with still only limited risk for bankruptcy at the moment.

LI's Altman-Z score of 2.53 is fine compared to the rest of the industry. LI outperforms 75.68% of its industry peers.

The Debt to FCF ratio of LI is 0.58, which is an excellent value as it means it would take LI, only 0.58 years of fcf income to pay off all of its debts.

Looking at the Debt to FCF ratio, with a value of 0.58, LI belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.

LI has a Debt/Equity ratio of 0.41. This is a healthy value indicating a solid balance between debt and equity.

The Debt to Equity ratio of LI (0.41) is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0.41
Debt/FCF	0.58
Altman-Z	2.53

ROIC/WACC0.56

WACC11.17%

2.3 Liquidity

LI has a Current Ratio of 1.57. This is a normal value and indicates that LI is financially healthy and should not expect problems in meeting its short term obligations.

With a Current ratio value of 1.57, LI perfoms like the industry average, outperforming 54.05% of the companies in the same industry.

LI has a Quick Ratio of 1.48. This is a normal value and indicates that LI is financially healthy and should not expect problems in meeting its short term obligations.

LI has a Quick ratio of 1.48. This is in the better half of the industry: LI outperforms 67.57% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.57
Quick Ratio	1.48

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

LI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 1189.57%, which is quite impressive.

Looking at the last year, LI shows a very strong growth in Revenue. The Revenue has grown by 173.48%.

Measured over the past years, LI shows a very strong growth in Revenue. The Revenue has been growing by 135.72% on average per year.

EPS 1Y (TTM)1189.57%

EPS 3YN/A

EPS 5YN/A

EPS growth Q2Q173.22%

Revenue 1Y (TTM)173.48%

Revenue growth 3Y135.72%

Revenue growth 5YN/A

Revenue growth Q2Q36.66%

3.2 Future

Based on estimates for the next years, LI will show a small growth in Earnings Per Share. The EPS will grow by 7.16% on average per year.

LI is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 25.70% yearly.

EPS Next Y38.17%

EPS Next 2Y44.39%

EPS Next 3Y38.11%

EPS Next 5Y7.16%

Revenue Next Year62.66%

Revenue Next 2Y49.2%

Revenue Next 3Y37.82%

Revenue Next 5Y25.7%

3.3 Evolution

Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 11.27, which indicates a very decent valuation of LI.

Compared to the rest of the industry, the Price/Earnings ratio of LI indicates a somewhat cheap valuation: LI is cheaper than 78.38% of the companies listed in the same industry.

The average S&P500 Price/Earnings ratio is at 28.67. LI is valued rather cheaply when compared to this.

Based on the Price/Forward Earnings ratio of 6.17, the valuation of LI can be described as very cheap.

94.59% of the companies in the same industry are more expensive than LI, based on the Price/Forward Earnings ratio.

LI is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.15, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	11.27
Fwd PE	6.17

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, LI is valued cheaper than 97.30% of the companies in the same industry.

Compared to the rest of the industry, the Price/Free Cash Flow ratio of LI indicates a rather cheap valuation: LI is cheaper than 100.00% of the companies listed in the same industry.