Li Auto Inc (LI, Financial), a burgeoning name in the electric vehicle (EV) industry, has seen its stock price climb by an impressive 10.17% over the past three months, with a current market capitalization of $39.07 billion. As of the latest trading price of $38.99, the company has experienced a modest gain of 0.95% over the past week. When compared to the GF Value of $92.93, Li Auto's stock is considered significantly undervalued, a sentiment that has remained consistent over the past quarter, with the past GF Value being $93.11. This valuation suggests a potential upside for investors, indicating that the stock may be trading below its intrinsic value.
Introduction to Li Auto Inc
Li Auto Inc, operating within the Vehicles & Parts industry, is a leading Chinese New Energy Vehicle (NEV) manufacturer. The company's business model revolves around designing, developing, manufacturing, and selling premium smart NEVs. Li Auto made its mark with the Li One, its first model, which is a six-seater, large premium plug-in electric SUV featuring a range extension system and cutting-edge smart vehicle solutions. In 2023, Li Auto sold over 376,000 NEVs, capturing approximately 4% of China's passenger NEV market. The company is expanding its product line to include both Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs), aiming to cater to a wider consumer demographic.
Assessing Li Auto's Profitability
Li Auto's Profitability Rank stands at 2/10, which may raise concerns about its long-term stability. However, the company's operating margin of 5.96% is better than 56.47% of 1,282 companies in the industry. Its Return on Equity (ROE) of 22.86% outperforms 90.66% of its peers, and the Return on Assets (ROA) at 10.61% is above the industry average. Furthermore, Li Auto's Return on Invested Capital (ROIC) is an impressive 29.05%, leading 96.84% of the industry. Despite only one year of profitability in the past decade, these figures suggest that Li Auto is efficient in its operations and capital allocation.
Growth Trajectory of Li Auto
Li Auto's growth metrics are particularly striking. The company's 3-Year Revenue Growth Rate per Share is a robust 70.20%, placing it ahead of 98.17% of 1,204 companies in the industry. The estimated EPS Growth Rate for the next three to five years is 21.20%, which is competitive in the market and better than 72.92% of the companies. These growth rates are indicative of Li Auto's strong market position and its potential for future expansion.
Notable Shareholders in Li Auto
Li Auto's shareholder base includes prominent investors, with Jim Simons (Trades, Portfolio) leading the pack holding 8,860,000 shares, representing 0.88% of the company. Steven Cohen (Trades, Portfolio) follows with 315,380 shares, accounting for 0.03%, and the iShares MSCI ACWI ex U.S. ETF (Trades, Portfolio) holds 210,406 shares, making up 0.02%. These holdings reflect the confidence of seasoned investors in Li Auto's business model and growth prospects.
Competitive Landscape
Li Auto operates in a highly competitive Vehicles & Parts industry. Its main competitors include General Motors Co (GM, Financial) with a market cap of $45.48 billion, Ford Motor Co (F, Financial) at $48.15 billion, and Stellantis NV (STLA, Financial) with a market cap of $84.48 billion. While Li Auto's market cap is slightly lower than these industry giants, its rapid growth and strong profitability metrics position it as a formidable contender in the EV space.
Conclusion
In summary, Li Auto Inc's stock performance and valuation present a compelling case for investors. The company's stock is significantly undervalued according to the GF Value, and its profitability and growth metrics are strong compared to industry peers. With a solid shareholder base and a competitive stance in the industry, Li Auto is well-positioned for future success. As the EV market continues to expand, Li Auto's innovative approach and strategic product expansion could drive further gains, making it a stock to watch for value investors.
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.
