Electric vehicle charging equipment provider Blink Charging Co. (BLNK), based in Hollywood, Fla., operates residential and commercial EV charging equipment in the United States. Its shares have risen 439% over the past nine months on the back of continued progress in the deployment of charging stations and optimism surrounding President Biden’s commitment to boost EV infrastructure.
However, BLNK’s stock price has declined 2.9% year-to-date and 16.2% over the past six months. In fact, the stock is now trading 35.7% below its 52-week high of $64.50, indicating short-term bearishness.
BLNK’s stock looks highly overvalued at its current price. Although the hype surrounding the EV charging industry has helped the stock gain 27.4% over the past month, BLNK has not yet been able to generate substantial profits. In addition to that, its weak growth prospects are a major concern, given the intense competition from established EV players in the market.
Here is what we think could influence BLNK’s performance in the near term:
Competition From Established Players
As the demand for EV charging continues to grow due to favorable government policies and growing environmental awareness, several new players are entering the nascent but fast-developing market. In fact, dominant EV charging players like ChargePoint Holdings (CHPT) and Tesla, Inc. (TSLA), which have strong, global distribution networks, are increasing their EV infrastructure investments to capitalize on President Biden’s plans to build 500,000 electric vehicle charging stations nationwide by 2030. As a relatively new player with weak fundamentals, BLNK could face stiff challenges in this competitive landscape.
BLNK’s revenue from charging services for the first quarter, ended March 31, 2021, was $0.18 million. This compares to $0.32 million in revenue for the first quarter of 2020. Also, its revenue from its ‘Other’ segment declined 54.3% from its year-ago value to $61,050 over this period. Furthermore, its gross profit declined 68.8% from the prior-year quarter to $96,379. BLNK reported a $7.39 million loss from operations and a $7.36 million net loss for this period. Its loss per share came in at $0.18, compared to a $0.11 loss per share in the first quarter of 2020.
The company’s 25.5% trailing-12-month gross profit margin is 26.4% lower than the 34.6% industry average. And its trailing-12-month ROE, ROA and ROTC are negative 18%, 8.8% and 10.9%, respectively. Also, its 0.05% trailing-12-month asset turnover ratio is 94.4% lower than the 1% industry average.
Bleak Growth Prospects
Analysts expect BLNK’s revenues to increase 55.4% in the current quarter, ending June 2021. However, its EPS is expected to decline 45.5% year-over-year to negative $0.16 in the current quarter. The Street expects BLNK’s EPS to decrease 33.3% in the next quarter, ending September 30, 2021, and 18.6% in 2021. The company failed to beat consensus EPS estimates in each of the trailing four quarters.
In terms of forward EV/Sales, BLNK is currently trading at 192.17x, which is significantly higher than the 1.76x industry average Its 145.47 forward Price/Sales multiple is significantly higher than the 1.34 industry average. Also, BLNK’s 6.88x trailing-12-month Price/Book ratio is 97.3% higher than the 3.49x industry average.
Unfavorable POWR Ratings
BLNK has an overall F rating, which translates to Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. BLNK has an F grade for Growth and Quality. The stock’s bleak growth prospects and low profitability are reflected in these grades.
Also, it has an F grade for Value, which is consistent with the stock’s premium valuation.
Beyond the grades we’ve highlighted, one can check out additional BLNK ratings for Sentiment, Stability and Momentum here.
Even though investors are optimistic about the burgeoning EV charging market because of the growing demand for energy-efficient commuting and favorable government policies for electric vehicles infrastructure, they should steer clear from BLNK because its weak fundamentals do not justify the company’s lofty valuation. Furthermore, since there is strong competition in the EV charging market, BLNK’s weak cash balance makes it a risky investment. So, we believe it’s wise to avoid the stock now.
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BLNK shares rose $0.34 (+0.82%) in premarket trading Friday. Year-to-date, BLNK has declined -1.87%, versus a 14.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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