Joby Aviation, Inc. (JOBY) is a transportation company that owns, manufactures, and operates aircraft. The Santa Cruz, Calif.-based company is developing an all-electric vertical take-off and landing (eVTOL) aircraft. The company delivers an application-based aerial ridesharing service directly to end-users, which is designed to help reduce urban congestion and accelerate the shift to sustainable transit modes.
A fully electric aviation future no longer seems like a distant dream as countries and airlines announce plans to introduce domestic electric flights. Last year, United Airlines Holdings, Inc. (UAL) announced its plans to purchase one hundred 19-seater ES-19 electric planes from Swedish startup Heart Aerospace. Many companies and startups are vying to grab a piece of the potentially highly lucrative emission-free commercial aircraft industry pie. However, not all companies are well-positioned to capitalize on the industry tailwinds. The industry faces the challenges of lengthy certification, technology development, and others. Due to these challenges, financially weak companies in this space might struggle to succeed.
JOBY stock has declined 38.1% in price over the past nine months and 39.1% over the past year to close the last trading session at $5.91. In addition, it is currently trading 56.8% below its 52-week high of $14.33, which it hit on August 11, 2021.
Here is what could influence JOBY’s performance in the upcoming months:
Disappointing Financials
JOBY’s total operating expenses increased 95.9% year-over-year to $259.08 million for its fiscal year ended Dec. 31, 2021. The company’s net loss widened 57.9% year-over-year to $180.32 million. Also, its comprehensive loss widened 59.2% year-over-year to $180.97 million. In addition, its total current liabilities increased 73% year-over-year to $13.84 million.
Low Profitability
JOBY’s trailing-12-month ROCE, ROC, and ROA are negative compared to the 13.63%, 6.88%, and 5.15%, respective industry averages.
Stretched Valuation
In terms of forward P/B, JOBY’s 3.80x is higher than the 2.69x industry average. Also, its 2.84x trailing-12-month P/B is 6.4% higher than the 2.67 industry average.
POWR Ratings Reflect Bleak Prospects
JOBY has an overall F rating, which equates to Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. JOBY has a D grade for Value, which is in sync with its 3.80x forward P/B, which is 40.9% higher than the 2.69x industry average.
Furthermore, the stock has an F grade for Growth, which is consistent with analysts’ expectations that its EPS will remain negative in its fiscal 2022 and 2023.
JOBY is ranked last among 73 stocks in the Air/Defense Services industry. Click here to access JOBY’s ratings for Momentum, Stability, Sentiment, and Quality.
Bottom Line
As countries and airlines turn their focus on a fossil-fuel-free aviation future, the demand for electric aircraft is expected to soar. However, electric aircraft makers face several challenges. So, we think JOBY’s poor financials and lower-than-industry profitability make it best avoided now.
How Does Joby Aviation, Inc. (JOBY) Stack Up Against Its Peers?
JOBY has an overall POWR Rating of F, equating to a Strong Sell rating. Therefore, one might want to consider investing in other Air/Defense Services stocks with an A (Strong Buy) or B (Buy) rating, such as Moog Inc. (MOG-A), Ducommun Incorporated (DCO), and Lockheed Martin Corporation (LMT).
JOBY shares were trading at $5.70 per share on Wednesday morning, down $0.21 (-3.55%). Year-to-date, JOBY has declined -21.92%, versus a -5.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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