EHang Holdings Ltd (EH, Financial) witnessed a daily gain of 6.92%, despite a 3-month loss of -1.22%. The company reported a Loss Per Share of 0.85. The question arises: Is the stock significantly overvalued? This article aims to provide a comprehensive analysis of EHang Holdings' valuation, urging readers to delve into the subsequent sections for a better understanding.
Company Overview
EHang Holdings is a pioneer in autonomous aerial vehicle (AAV) technology, striving to make air mobility safe, autonomous, and eco-friendly. With a diverse range of AAV products and solutions, EHang caters to various industries, including passenger transportation, logistics, smart city management, and aerial media. Despite the company's promising portfolio, its current stock price of $20.55 per share appears significantly overvalued compared to its GF Value of $8.35.
A Closer Look at GF Value
The GF Value is a unique measure of a stock's intrinsic value, derived from historical trading multiples, an adjustment factor based on past performance and growth, and future business performance estimates. If the stock price significantly surpasses the GF Value Line, it may be overvalued, indicating poor future returns. Conversely, if the stock price is significantly below the GF Value Line, it could be undervalued, suggesting higher future returns.
For EHang Holdings (EH, Financial), the stock appears to be significantly overvalued. With a market cap of $1.20 billion, the stock's future return is likely to be much lower than its future business growth.
Financial Strength Analysis
Investing in companies with poor financial strength can lead to a higher risk of permanent capital loss. Therefore, it's vital to analyze the financial strength of a company before making an investment decision. EHang Holdings' cash-to-debt ratio stands at 0.9, outperforming 53.92% of 293 companies in the Aerospace & Defense industry. The overall financial strength of EHang Holdings is ranked 5 out of 10, indicating fair financial health.
Profitability and Growth
Investing in profitable companies, especially those with consistent long-term profitability, is generally less risky. EHang Holdings has been profitable 0 over the past 10 years. Over the past twelve months, the company reported a revenue of $8 million and a Loss Per Share of $0.85. Its operating margin is -562.41%, ranking worse than 97.29% of 295 companies in the Aerospace & Defense industry. Overall, EHang Holdings' profitability rank is 1 out of 10, indicating poor profitability.
Growth is a crucial factor in a company's valuation. EHang Holdings' 3-year average revenue growth rate ranks worse than 98.48% of 264 companies in the Aerospace & Defense industry. Its 3-year average EBITDA growth rate is -58.9%, ranking worse than 93.04% of 230 companies in the same industry.
ROIC vs. WACC
Comparing a company's return on invested capital (ROIC) with its weighted cost of capital (WACC) is another way to evaluate its profitability. ROIC measures how effectively a company generates cash flow relative to the capital it has invested in its business. WACC represents the average rate a company is expected to pay to finance its assets. If the ROIC exceeds the WACC, it suggests that the company is creating value for shareholders. Over the past 12 months, EHang Holdings's ROIC was -131.03, while its WACC stood at 11.58.
Conclusion
In conclusion, EHang Holdings' stock appears to be significantly overvalued. The company's financial condition is fair, but its profitability is poor. Its growth ranks worse than 93.04% of 230 companies in the Aerospace & Defense industry. To learn more about EHang Holdings' stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
