A Rising Star or a Stock Shock?
Nikola NKLA is creating waves on Zacks.com lately, intriguing investors with its performance trajectory.
Diving into the numbers, this trailblazer in zero-emission trucks has seen a recent -7.4% decline in its shares over the past month, contrasting with a +5.3% surge in the Zacks S&P 500 composite during the same period.
The Zacks Automotive – Domestic industry, encompassing Nikola, experienced a 7.7% dip in the last month, prompting scrutiny into the stock’s near-future journey.
Shifting focus from fleeting news or industry gossip, let’s dig into the core factors shaping Nikola’s imminent trajectory.
Earnings Momentum Valorized
At Zacks, the keystone for evaluating a company’s future is the metamorphosis in earnings forecasts. Why? Because, we argue, a firm’s future earnings stream dictates its stock’s inherent worth.
Tracking how analysts amend earnings forecasts due to evolving business scenarios is paramount. A rise in earnings projections translates to an upswing in fair stock value. This often spurs investors to buy, elevating the stock price. Research underpins a strong bond between earnings forecast trends and stock price shifts.
Forecasts indicate Nikola expecting a loss of $0.09 per share this quarter, marking a +65.4% deviation from a year prior, with a 30-day consensus estimate shift of +33.3%.
For the ongoing fiscal year, a -$0.42 consensus earnings forecast signifies a +46.8% variance from the prior year, with a recent uptick of +30.7%. Looking ahead, a -$0.30 per share forecast for the next fiscal year signals a +28.6% shift from the previous report, with a 30-day change of +30.4%.
Bolstered by a stringent audited track record, our Zacks Rank, a premier stock gauge, underscores Nikola’s promise. Recent estimate shifts earned Nikola a Zacks Rank #2 (Buy).
Evaluating the trajectory of the forward 12-month consensus EPS estimate lends further insight:
Revenue Expansion Prospects
While earnings evolution mirrors operational fitness, revenue growth is a yardstick of a company’s vitality. Sustained earnings growth hinges on revenue ascension. Familiarizing with a firm’s revenue growth is hence imperative.
Nikola anticipates $19.68 million in sales this quarter, envisaging a +77% year-over-year rise. Forecasts for the current and upcoming fiscal years stand at $192.43 million (+430.4%) and $533.94 million (+177.5%), respectively.
Past Performances and Mary’s Luck
Nikola’s preceding quarter boasted $11.53 million in revenue, signaling a +75.8% yearly growth whilst registering a -$0.11 EPS, marking a bullish revision from -$0.37 a year earlier.
Though reporting revenues of $14.52 million, Nikola’s surpass ratio was -20.55% against expectations. Conversely, its EPS outperformed by +31.25%. Over four quarters, Nikola exceeded EPS forecasts thrice, only meeting revenue estimates once.
Valuation Ballad: Overpriced Symphony or Bargain Concerto?
Discounting valuation trivializes investment rationale. Noteworthy consideration is delving into whether a stock’s price aligns with its intrinsic merit and growth avenues.
Comparing valuation metrics like price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) against historical benchmarks unveils if the stock is judiciously priced. Concurrently, juxtaposing against peers divulges pricing equilibrium.
In Zacks’ domain, a stringent valuation criterion unfolds through the Zacks Value Style Score. Nikola’s rating of F signifies a premium tag against industry players.
Curtain Call
Navigating through the numbers and nuances laid out, pondering the buzz encircling Nikola on Zacks.com prompts discernment. Touted with a Zacks Rank #2, Nikola hints towards potential outperformance in the market’s near horizon.
