Luxury electric vehicle company Lucid Group, Inc. (LCID), which is based in Newark, Calif., had an impressive stock market debut on July 26, 2021, merging with special purpose acquisition company Churchill Capital Corp IV. Furthermore, it has completed its first Lucid Air Dream Edition delivery—the first electric car with a range of more than 500 miles on a single charge. 

Over the past five days, the stock has gained 53.4% in price to close yesterday’s trading session at $36.99.

However, it is currently trading 75.3% below its 52-week high of $64.86, which it hit on February 18, 2021. The electric vehicle (EV) industry is facing severe semiconductor chip and labor shortages, which could hamper the company’s production plans. Moreover, rising competition in the EV space and the company’s zero revenues so far make its near-term prospects bleak.

Click here to checkout our Electric Vehicle Industry Report for 2021

Here’s what could influence LCID’s performance in the coming months:

Poor Profitability

In terms of the trailing-12-month asset turnover ratio, LCID’s 0% compares with the 1.06% industry average. Likewise, its 27.43% trailing-12-month gross profit margin is 23.7% lower than the 35.93% industry average. Moreover, the stock’s trailing-12-month ROTC and ROTA are negative compared to the 7.79% and 6.26% respective industry averages.

Lofty Valuation

In terms of forward EV/S, LCID’s 858.07x is significantly higher than the 1.43x industry average. Likewise, its 786.39x forward P/S is considerably higher than the 1.21x industry average. Furthermore, the stock’s 13.50x P/B is 278.2% higher than the 3.57x industry average.

Unfavorable Analyst Estimates

Analysts expect LCID’s EPS to remain negative in the current quarter, current year, and next year. And its EPS is expected to decline at a 38.1% rate per annum over the next five years. In addition, Wall Street analysts expect the stock to hit $23.33 in the near term, indicating a potential 36.9% decline.

POWR Ratings Reflect Bleak Prospects

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

Our proprietary rating system also evaluates each stock based on eight distinct categories. LCID has an F grade for Value, in sync with its higher-than-industry valuation ratios.

LCID has an F grade for Growth and a D grade for Sentiment, which are in sync with its unfavorable analyst estimates. In addition, the stock has a D grade for Stability, consistent with its 1.21 beta.

LCID is ranked #54 out of 63 stocks in the Auto & Vehicle Manufacturers industry. Click here to access LCID’s ratings for Quality and Momentum as well.

Click here to check out our Automotive Industry Report for 2021

Bottom Line

The current semiconductor and labor shortage could lead to unexpected delays and hurdles in production. In addition, LCID faces stiff competition in the overcrowded EV market. Because the stock looks overvalued at the current price level, we think it is best avoided now.

How Does Lucid Group (LCID) Stack Up Against its Peers?

While LCID 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) rating: Suzuki Motor Corporation (SZKMY), Daimler AG (DDAIF), and Isuzu Motors Limited (ISUZY).

Click here to checkout our Electric Vehicle Industry Report for 2021

LCID shares were trading at $37.09 per share on Monday afternoon, up $0.10 (+0.27%). Year-to-date, LCID has gained 270.53%, versus a 23.89% 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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