Fisker Inc. (FSR) in Manhattan Beach, Calif., is building a technology-enabled, asset-light automotive business model for the automotive industry. The company develops, designs, markets, leases, and sells electric vehicles (EV). FSR recently announced Project Ronin, its third vehicle after its Fisker Ocean SUV and Fisker PEAR. It also confirmed that Foxconn will build its second car, a compact EV, at a newly acquired plant in Lordstown, Ohio.

However, the stock has declined 14.6% in price over the past month and 50.4% over the past six months to close yesterday’s trading session at $10.61.

FSR is currently trading 55.3% below its 52-week high of $23.75, which it hit on Nov. 16, 2021. In addition, the entire electric vehicle industry is facing severe supply chain worries and inflationary pressures, which could hamper the company’s production plans. Furthermore, rising competition in the EV space and FSR’s essentially zero sales so far make its near-term prospects bleak.

Here is what could influence FSR’s performance in the upcoming months:

Disappointing Financials

For its fiscal first quarter, ended March 31, 2022, FSR’s net revenue declined 45.5% year-over-year to $12,000. The company’s adjusted loss from operations for the quarter increased 266.7% year-over-year to $118.39 million. Its net loss came in at $122.07 million, compared to $176.84 million in the prior-year period. And its loss per share was  $0.41, compared to $0.63 in the year-ago period.

Low Profitability

In terms of trailing-12-month gross profit margin, FSR’s 14.58% is 60.1% lower than the 36.51% industry average. Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA are negative versus the 17.45%, 7.51%, and 6.12% respective industry averages.

Stretched Valuation

In terms of forward P/S, FSR’s 58.78x is significantly higher than the 0.92x industry average. Likewise, its 47x forward EV/S is comparatively higher than the 1.09x industry average. Furthermore, the stock’s 6.23x forward P/B is 153.8% higher than the 2.45x industry average.

Unfavorable Analyst Estimates

Analysts expect FSR’s EPS to decrease 150% in the current quarter, 13.5% next quarter, and 2.5% in the current year. Also, its EPS is expected to remain negative in the current quarter, next quarter, current year, and next year.

POWR Ratings Reflect Bleak Prospects

FSR has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. FSR has an F grade for Quality, which is in sync with its lower-than-industry profitability ratios.

The stock has an F grade for Stability, which is consistent with its 1.08 beta. In addition, FSR has an F grade for Value, in sync with its higher-than-industry valuation ratios.

FSR also has a D grade for Growth and an F grade for Sentiment. This is justified because analysts expect its EPS to decline in the near term.

FSR is ranked last among  68 stocks in the F-rated Auto & Vehicle Manufacturers industry. Click here to access FSR’s ratings for Momentum.

Click here to check out our Automotive Industry Report for 2022

Bottom Line

FSR is currently trading below its 50-day and 200-day moving averages of $11.44 and $14.21, respectively, indicating a downtrend. Moreover, it could continue retreating in the near term due to concerns over high commodity-costs and supply chain disruptions. Because the stock looks overvalued at the current price level, we think it is best to avoid it now.

How Does Fisker (FSR) Stack Up Against its Peers?

While FSR has an overall POWR Rating of F, one might want to consider investing in the following Auto & Vehicle Manufacturers stocks with an A (Strong Buy) or B (Buy) rating: Honda Motor Company, Ltd. (HMC), Isuzu Motors Limited (ISUZY), and Bayerische Motoren Werke Aktiengesellschaft (BMWYY).

FSR shares were trading at $10.95 per share on Wednesday afternoon, up $0.34 (+3.20%). Year-to-date, FSR has declined -30.39%, versus a -17.17% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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