The demand for electric vehicles (EVs) and the infrastructure needed to keep them running has grown significantly over the past few years. This can be attributed primarily to increasing concerns about climate change and supportive government policies. According to a recent survey by KPMG, automotive executives think more than half of their sales will be EVs by 2030, in line with U.S. President Biden’s EV sales goal.
However, according to an evadoption report, the number of internal combustion engine (ICE) vehicles on the road is expected to increase by 20 million this decade. And even though the EV industry is expected to grow significantly, EVs are still likely to be a small percentage of vehicles in operation. So, as the EV industry grows, all companies in the sector may not benefit equally due to sector overcrowding.
EV-related stocks QuantumScape Corporation (QS), Blink Charging Co. (BLNK), and EVgo, Inc. (EVGO) look overvalued at the current price level, given their companies’ bleak growth prospects. Also, analysts have recently downgraded them. So, we think it could be wise to avoid these stocks now.
QuantumScape Corporation (QS)
San Jose, Calif.-based QS develops battery technology for EVs and other applications. The company focuses on developing and commercializing its solid-state lithium metal batteries. Morgan Stanley (MS) analyst Adam Jonas recently downgraded the stock’s rating to ‘Hold’ from ‘Buy.’
For its fiscal third quarter, ended September 30, 2021, QS’ operating expense increased 160.1% year-over-year to $53.83 million. The company’s general and administrative expenses increased 287% year-over-year to $14.36 million. Also, its non-GAAP operating loss increased 160% year-over-year to $41.10 million.
In terms of forward P/B, QS’ 7.25x is higher than the 3.60x industry average. Analysts expect its EPS for its fiscal 2022 to decrease 16.3% year-over-year to $0.50. The stock has lost 67.6% in price year-to-date to close yesterday’s trading session at $27.35.
QS’ weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an F grade for Value and Sentiment and a D grade for Stability and Quality. It is ranked last among 66 stocks in the Auto Parts industry. To check the other ratings of QS for Growth and Momentum, click here.
Blink Charging Co. (BLNK)
BLNK in Hollywood, Fla., owns and operates EV charging equipment and networked EV charging services. The company offers residential and commercial EV charging equipment, and its principal products and services include the Blink EV charging network and EV charging equipment, and EV-related services. Cowen recently downgraded the stock’s rating to ‘Market Perform’ from ‘Outperform.’
BLNK’s operating expenses for its fiscal third quarter, ended September 30, 2021, increased 288.3% year-over-year to $16.70 million. The company’s net loss increased 292.3% year-over-year to $15.30 million. Also, its adjusted EBITDA loss increased 127% year-over-year to $8.40 million.
In terms of forward EV/S and P/S, BLNK’s respective 68.98x and 79.87x are higher than the industry averages of 1.91x and 1.59x. Analysts expect BLNK’s EPS for its fiscal year 2021 to decrease 111.9% year-over-year to $1.25. It has missed the Street’s EPS expectations in each trailing four quarters. The stock has declined 15% in price year-to-date to close yesterday’s trading session at $36.33.
BLNK’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, which equates to a Strong Sell in our proprietary rating system. It has an F grade for Value, Stability, and Quality and a D grade for Growth and Sentiment. It is ranked last among 92 stocks in the Industrial – Equipment industry. Click here to check BLNK’s rating for Momentum.
Click here to check out our Industrial Sector Report for 2021
EVgo, Inc. (EVGO)
EVGO owns and operates a direct fast-charging network for EVs. The Los Angeles-based company’s fast-charging network is powered by renewable energy, and it has approximately 800 fast-charging locations. Credit Suisse recently downgraded the stock’s rating to ‘Neutral.’
For its fiscal third quarter, ended September 30, 2021, EVGO’s adjusted EBITDA loss increased 164% year-over-year to $14.27 million. The company’s general and administrative expenses increased 161.1% year-over-year to $20.88 million. Also, its total operating expenses came in at $24.27 million, up 131.8% year-over-year.
In terms of forward EV/S and P/S, EVGO’s respective 89.35x and 38.43x are higher than the 1.40x and 1.16x industry averages. Analysts expect its EPS for its fiscal year 2022 to decrease 24% year-over-year to $0.31. The stock has declined 20.3% in price over the past nine months to close yesterday’s trading session at $11.79.
EVGO’s weak fundamentals are reflected in its POWR ratings. It has an overall F rating, which equates to a Strong Sell. In addition, it has an F grade for Value and Stability and a D grade for Growth and Quality. It is ranked #83 in the Industrial – Equipment industry. Click here to check the other ratings for EVGO (Momentum and Sentiment).
Click here to checkout our Electric Vehicle Industry Report for 2021
Want More Great Investing Ideas?
QS shares were trading at $25.04 per share on Friday morning, down $2.31 (-8.45%). Year-to-date, QS has declined -70.35%, versus a 22.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|QS||Get Rating||Get Rating||Get Rating|
|BLNK||Get Rating||Get Rating||Get Rating|
|EVGO||Get Rating||Get Rating||Get Rating|