The industrial sector will likely remain under pressure amid supply constraints, labor shortages, and an unstable economic environment.
Therefore, I think EVgo, Inc. (EVGO), Ballard Power Systems Inc. (BLDP), and Blink Charging Co. (BLNK), which are currently trading under $10, might be best avoided considering their weak fundamentals.
U.S. manufacturing activity slumped in March to the lowest level in nearly three years as new orders plunged. Analysts said activity could decline further due to tighter credit conditions.
Moreover, the Russia-Ukraine conflict has not only resulted in military casualties and geopolitical tensions but also disrupted the global economic recovery from the COVID-19 pandemic.
Economic sanctions on various countries, supply chain disruptions, and surging commodity prices have led to inflation across goods and services and impacted industrial markets worldwide.
Also, the global construction equipment market sagged last year due to the collapse of demand in China, and the decline is expected to continue this year.
Take a look at the stocks mentioned above:
EVgo, Inc. (EVGO)
EVGO owns and operates a direct current fast charging network for electric vehicles. The company offers electricity directly to drivers, who access its publicly available networked chargers; original equipment manufacturer charging and related services; fleet and rideshare public charging services; and charging as a service and fleet dedicated charging services.
EVGO’s forward EV/Sales multiple of 8.12 is 634.1% higher than the industry average of 1.11. Its forward P/S multiple of 3.20 is 279.2% higher than the industry average of 0.84.
Its trailing-12-month asset turnover ratio of 0.07x is 92.9% lower than the 1.04x industry average. Its trailing-12-month gross profit margin of 24.05% is 31.7% lower than the 35.23% industry average.
EVGO’s operating loss increased 40.9% year-over-year to $42.49 million during the fiscal fourth quarter that ended December 31, 2022. The company’s adjusted EBITDA decreased 23% year-over-year to negative $20.06 million, whereas its adjusted general and administrative expenses increased 36.7% year-over-year to $25.04 million.
Also, its net loss per share to Class A common stockholders came in at $0.06.
Analysts expect EVGO’s EPS to be negative $0.10 for the first fiscal quarter that ended March 2023. Its revenue is expected to be $26.04 million for the same quarter. Also, the company failed to surpass the revenue estimates in three of the trailing four quarters, which is disappointing.
The stock has declined 49.6% over the past year to close its last trading session at $6.24. Its 24-month beta is 1.83.
EVGO’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
EVGO is also graded an F in Quality, Value, and Stability and a D in Sentiment. It is ranked #87 among 89 stocks in the Industrial - Equipment industry.
In addition to the POWR Ratings stated above, EVGO’s rating for Growth and Momentum can be seen here.
Ballard Power Systems Inc. (BLDP)
Headquartered in Burnaby, Canada, BLDP designs, develops, manufactures, sells, and services proton exchange membrane fuel cell products. The company offers its products for power product markets, consisting of heavy-duty motives, such as bus, truck, rail, and marine applications; material handling; and power generation.
BLDP’s forward EV/Sales multiple of 5.78 is 257.5% higher than the industry average of 1.62. Its forward P/S multiple of 14.70 is significantly higher than the industry average of 1.31.
Its trailing-12-month asset turnover ratio of 0.06x is 92.2% lower than the 0.80x industry average.
BLDP’s total fuel cell products & services revenue decreased 44.1% year-over-year to $20.50 million during the fiscal fourth quarter that ended December 31, 2022. The company’s adjusted EBITDA decreased 82% year-over-year to negative $25.48 million, whereas its gross margin came in at negative $5.90 million, compared to a positive margin of $4.80 million in the previous-year quarter.
BLDP’s revenue is expected to decline 5.8% year-over-year to $19.79 million for the fiscal first quarter that ended March 2023. Its EPS is expected to be negative $0.14 for the same quarter. Also, the stock failed to surpass the revenue and EPS estimates in each of the trailing four quarters.
The stock has plunged 50.5% over the past year to close the last trading session at $5.02. It has a 24-month beta of 2.17.
It’s no surprise that BLDP has an overall rating of F, which translates to a Strong Sell in our POWR Ratings system.
BLDP also has an F grade for Quality and Stability and a D in Growth, Value, and Sentiment. It is ranked #88 in the same industry.
Click here to see the POWR Ratings of BLDP (Momentum).
Blink Charging Co. (BLNK)
BLNK owns, operates, manufactures, and provides electric vehicle (EV) charging equipment and networked EV charging services in the United States and internationally.
BLNK’s trailing-12-month P/S multiple of 4.53 is 246.6% higher than the industry average of 1.31. Its trailing-12-month EV/Sales multiple of 4.23 is 161.2% higher than the industry average of 1.62.
Its trailing-12-month asset turnover ratio of 0.21x is 74.3% lower than the 0.80x industry average. Its trailing-12-month gross profit margin of 29.30% is 2.1% lower than the 29.94% industry average.
During the fiscal fourth quarter that ended December 31, 2022, BLNK’s loss from operations increased 45.3% year-over-year to $27.77 million. The company’s net loss increased 48.4% year-over-year to $28.15 million.
Moreover, its adjusted EBITDA decreased 61.6% year-over-year to negative $14.75 million, while its net loss per share increased 22.2% year-over-year to 0.55.
Street expects BLNK’s EPS to decline 33.3% year-over-year to negative $0.48 for the fiscal first quarter ended March 2023. Its revenue is expected to be $21.64 million for the same quarter. Also, the stock failed to surpass the EPS estimates in three of the trailing four quarters.
The stock has lost 67.9% over the past year to close the last trading session at $7.75. Its 24-month beta is of 1.94.
BLNK’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
It also has an F grade in Quality, Value, and Stability and a D in Growth. BLNK is ranked last in the same industry.
For additional POWR Ratings of BLNK (Sentiment and Momentum), click here.
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EVGO shares were trading at $6.12 per share on Tuesday morning, down $0.12 (-1.92%). Year-to-date, EVGO has gained 36.91%, versus a 8.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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