Xpeng Motors (NYSE:XPEV) trades at a reasonable valuation, given its strong growth momentum and potential, as well as its competitive positioning in its industry.
Also known as XMotors.ai, the company is headquartered in Guangzhou, China. It is one of China’s leading EV companies, and is seamlessly integrated with AI, advanced driver-assistance technologies, and advanced internet services.
XPeng continues to grow rapidly, thanks to full-stack in-house research and development, strong close-looped data capabilities, and various technology iterations. (See XPeng stock charts on TipRanks)
The company is dedicated to creating a strong roadmap, making technological innovations and continuing long-term investments to improve sales volume and facilities. In addition, its strong cash condition has enabled it to grasp enormous growth opportunities, cement competitive advantages, and execute growth strategies.
XPeng has a wide network of sales teams that have contributed to the increase in sales and distribution over the past year.
During the first quarter of 2021, XPeng delivered 13,340 vehicles, which was an increase of 487.4% year-over-year. In March 2021, the company covered 70 major cities, and its service network and physical sales consisted of 61 centers and 178 stores.
The company expects revenues of $525 million to $540 million in Q2, which would be a year-over-year increase of about 475.5%. Q2 earnings are expected to be released on August 26. This writer is bullish on XPEV stock.
XPeng's Valuation
Despite XPeng enjoying strong growth momentum, the market is valuing it somewhat reasonably. It is only priced at 9.5x forward revenues.
Yearly revenues are expected to soar by 183% in 2021, and by another 77.2% in 2022. The company’s gross margin is also expanding with scale, growing from 4.55% in 2020, to 13.21% forecast for 2021, and 15.61% forecast for 2022.
Wall Street’s Take
From Wall Street analysts, XPeng earns a Strong Buy consensus rating based on seven Buy ratings, zero Hold ratings, and zero Sell ratings in the past three months. Additionally, the average XPEV price target of $55 puts the upside potential at 38.6%.
Summary and Conclusions
XPeng is enjoying rapid revenue growth, thanks to its innovative approach to automotive design and strong competitive positioning in the Chinese EV industry.
Furthermore, Wall Street analysts are overwhelmingly bullish on the stock, and the current valuation looks fairly reasonable. As a result, the stock looks like it could be a good buy.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.