Long-established in the Vehicles & Parts industry, XPeng Inc (XPEV, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 8.15%, juxtaposed with a three-month change of 109.39%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of XPeng Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 5/10
- 2. Profitability rank: 1/10
- 3. Growth rank: 0/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 9/10
Based on the above method, GuruFocus assigned XPeng Inc the GF Score of 55 out of 100, which signals poor future outperformance potential.
XPeng Inc: A Snapshot of the Business
Founded in 2015, XPeng Inc is a leading Chinese smart electric vehicle, or EV, company that designs, develops, manufactures, and markets EVs in China. Its products primarily target the growing base of technology-savvy middle-class consumers in the midrange to high-end segment in China's passenger vehicle market. The company sold over 120,000 EVs in 2022, accounting for about 2% of China's passenger new energy vehicle market. It is also a leader in autonomous driving technology. With a market cap of $15.07 billion and sales of $3.00 billion, XPeng Inc operates with a margin of -49.24%.
Financial Strength Analysis
XPeng Inc's financial strength indicators present some concerning insights about the company's balance sheet health. XPeng Inc has an interest coverage ratio of 0, which positions it worse than 0% of 969 companies in the Vehicles & Parts industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 1.55, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years.
Profitability Analysis
XPeng Inc's low Profitability rank can also raise warning signals. With a Piotroski F-Score of 1, XPeng Inc's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, XPeng Inc might be facing challenges in these areas.
Growth Prospects
A lack of significant growth is another area where XPeng Inc seems to falter, as evidenced by the company's low Growth rank.
Conclusion
Given XPeng Inc's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has made significant strides in the EV industry, its financial indicators suggest that it may struggle to maintain its momentum. As such, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
