Founded in 2015, Hyliion Holdings Corp. (HYLN) focuses on the provision of electrified powertrain solutions for the commercial transportation industry. The company aims to achieve a global net-carbon-negative commercial transportation system through its technology. The Texas-based company also provides battery management systems to hybrid and fully electric vehicle requirements.

HYLN entered the Electric Vehicle (EV) market focusing on trucks and has been marketing a hybrid-power system for Class 8 trucks. Moreover, the company started trading on October 2^nd following a reverse merger with a special purpose acquisition company (SPAC). Though the stock has gained 154.6% year-to-date, investors are concerned about its growth outlook amid strong competition. Lack of investor optimism and a potential downside based on several other factors have led to a “Sell” in our proprietary ratings system.

Here is how our proprietary POWR Ratings system evaluates HYLN:

Trade Grade: D

HYLN is currently trading lower than its 50-day moving average of $27.22 but above its 200-day moving average of $24.96, indicating that the stock is neither in an uptrend nor in a downtrend. However, the stock’s 7.7% loss over the past three months reflects short-term bearishness.

The company installed 8 hybrid electric units for four fleet-based customers for the third quarter that ended September 2020. HYLN reported a $11.8 million loss from operations for the nine months ending September 2020. It had a net loss of $18.7 million over this period.

HYLN signed an agreement with FEV North America Inc. to accelerate the commercialization of the Hypertruck ERX. HYLN completed the strategic collaboration between Hyliion Inc. and Tortoise Acquisition Corp. on October 1^st yielding roughly $520 million in net proceeds. The company appointed Jose Oxholm as its Vice President, General Counsel and Chief Compliance Officer, effective November 16^th.

Buy & Hold Grade: F

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, HYLN is poorly positioned. The stock is currently trading 56.8% below its 52-week high of $58.66, which it hit on September 2^nd.

While the company went public last month, the 28-year old CEO Thomas Healy commented that the company is on track to meet its product milestones in 2021. In the words of the CEO, “In the third quarter of 2020, we made progress toward commercialization of our Hybrid and Hypertruck ERX solutions for the Class 8 truck market, while also establishing key partnerships. We are experiencing strong interest for our solutions and are utilizing our resources to develop a scaled infrastructure that will be able to support demand from this $800 billion market.” However, this commentary failed to convince investors.

Peer Grade: D

HYLN is currently ranked #18 out of 20 stocks in the Trucking Freight industry. Other popular stocks in the industry are Daseke, Inc. (DSKE), Old Dominion Freight Line, Inc. (ODFL), and XPO Logistics, Inc. (XPO).

HYLN has comfortably beaten the year-to-date return of each of these industry participants. DSKE, ODFL, and XPO have gained 117.4%, 62.8% and 32.8%, respectively, over this period.

Industry Rank: C

The Trucking Freight industry is ranked #63 out of 123 StockNews.com industries. The companies in this industry provide commercial fleet management and supply chain solutions to small businesses and large enterprises worldwide through long-distance and local trucking.

However, with the rising number of coronavirus cases, many companies have shifted online. This has led to a decrease in demand for manufacturing activities. As the economy revives, the demand for companies in this industry are expected to soar.

Overall POWR Rating: D (Sell)

Overall, HYLN is rated a “Sell” due to investors’ concerns over its competitive landscape, short- and long-term bearishness, and weak price momentum, as determined by the four components of our POWR Ratings system.

Bottom Line

While HYLN has found a market niche for itself in the overcrowded EV market, it is currently in its early stages and a lot depends on its future growth. In addition to its lack of experience, the company has stiff competition from already established leaders in the EV market like Tesla, Inc. (TSLA) and Nikola Corp. (NKLA). The company is in a race against TSLA and NKLA to build electric trucks.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is not favorable for HYLN. The consensus EPS estimate for next year indicates a 22.6% decline. So, while the company is expected to make progress in the long term, its outlook seems dull at the moment.

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HYLN shares were trading at $25.90 per share on Wednesday morning, up $0.57 (+2.25%). Year-to-date, HYLN has gained 160.30%, versus a 13.86% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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