Persistent inflation, the recent collapse of the banking industry, and high-interest rates, and falling consumer sentiment might dampen the auto industry’s near-term prospects.
Therefore, amidst the macroeconomic challenges, I think Luminar Technologies, Inc. (LAZR), Aeva Technologies, Inc. (AEVA), Nuvve Holding Corp. (NVVE), and Siyata Mobile Inc. (SYTA) could be best avoided, considering their fundamental weakness.
Consumer sentiment in the U.S. declined in March, reaching its lowest point since August 2011, according to the report by the University of Michigan. This decline is attributed to factors such as high inflation, fluctuating oil prices, geopolitical tensions, and the rise in interest rates.
Additionally, as per JPMorgan Chase & Co CEO Jamie Dimon, the U.S. banking crisis is still ongoing and will have long-lasting effects. He wrote, “The current crisis is not yet over, and even when it is behind us, there will be repercussions for years to come.”
Coming to the auto industry, global automotive sales were hit hard by the pandemic. Amid the supply-chain disruptions, the market for new vehicles continued to struggle into the last quarter of 2022, with a sales decline of 2.2% year-over-year.
The inflation and interest rates have made financing more expensive for consumers, which should impact the demand in the auto industry. Moreover, interest rates are not expected to be lowered until 2024, meaning that vehicle financing will remain more expensive than in recent years.
Moreover, the auto industry’s profit margins might suffer due to rising fuel costs amid lingering production cuts and falling U.S. oil reserves.
Let’s dive deeper into these stocks to see what makes them best avoided this week:
Luminar Technologies, Inc. (LAZR)
LAZR is an automotive technology company that provides sensor technologies and software for passenger cars and commercial trucks in North America, the Asia Pacific, Europe, and the Middle East. It operates in two segments, Autonomy Solutions, and Advanced Technologies and Services.
Its trailing-12-month asset turnover ratio of 0.05x is 95% lower than the 1.03x industry average.
During the fiscal fourth quarter that ended December 31, 2022, LAZR’s total revenue narrowed 9.9% year-over-year to $11.13 million. Its non-GAAP gross loss increased 492.9% year-over-year to $22.96 million, while its non-GAAP net loss increased 123% year-over-year to $94.88 million.
Also, its non-GAAP net loss per share increased by 116.7% year-over-year to $0.26.
Street expects LAZR’s EPS to decline 29.5% year-over-year to negative $0.21 in the fiscal first quarter ended March 2023. Its revenue for the same quarter is expected to be $11.94 million. It failed to surpass consensus EPS estimates in three of the trailing four quarters, which is disappointing.
Over the past year, the stock has declined 62.1% to close the last trading session at $5.88.
LAZR’s weak prospects are reflected in its POWR Ratings. 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, with each factor weighted to an optimal degree.
LAZR has an F grade for Quality, Value, Sentiment, and Stability. It is ranked #58 out of 60 stocks in the Auto Parts industry.
Beyond what we stated above, we have also given LAZR grades for Growth and Momentum. Get all the LAZR ratings here.
Aeva Technologies, Inc. (AEVA)
AEVA designs 4D LiDAR-on-chips in the United States, Thailand, Europe, the Middle East, and Asia. The company develops its products using frequency modulated continuous wave sensing technology.
Its trailing-12-month asset turnover ratio of 0.01x is 98.3% lower than the 0.61x industry average.
AEVA’s revenue declined 93.5% year-over-year to $188 thousand for the fiscal fourth quarter that ended December 31, 2022. Its non-GAAP operating loss increased 49.6% year-over-year to $38.51 million. Its non-GAAP net loss increased 43.9% year-over-year to $36.83 million.
In addition, its non-GAAP net loss per share came in at $0.17, representing an increase of 41.7% year-over-year.
Analysts expect AEVA’s EPS to decline 11% year-over-year to negative $0.14 for the first fiscal quarter ending March 2023. Its revenue is expected to decline 27.1% year-over-year to $828.57 thousand for the same quarter.
Over the past year, the stock has declined 75.7% to close the last trading session at $1.02.
AEVA’s poor outlook is reflected in its POWR Ratings. The stock has an overall rating of F, which equates to a Strong Sell in our proprietary rating system.
It has an F grade for Quality, Momentum, and Stability and a D in Growth and Value. It is ranked #59 in the same industry.
Click here to see the other ratings of AEVA for Sentiment.
Nuvve Holding Corp. (NVVE)
NVVE is a green energy technology company that develops and commercializes vehicle-to-grid technology in North America, Europe, and Japan.
Its trailing-12-month asset turnover ratio of 0.07x is 90.6% lower than the 0.80x industry average. Its trailing-12-month gross profit margin of 16.36% is 44.2% lower than the 29.30% industry average.
For the fiscal fourth quarter that ended December 31, 2022, NVVE’s total revenue declined 8.2% year-over-year to $1.15 million. Its operating loss widened 4.5% year-over-year to $8.74 million, whereas its total operating expenses increased 2.8% year-over-year to $9.89 million. In addition, its loss per share attributable to NVVE came in at $0.33.
NVVE’s revenue is expected to decline 75.9% year-over-year to $570.48 thousand in the fiscal first quarter that ended March 2023, Its EPS is expected to come in at negative $0.41 for the same quarter. It failed to surpass consensus EPS and revenue estimates in three of the trailing four quarters.
The stock has declined 88.9% over the past year, to close the last trading session at $0.88.
NVVE’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It is ranked #57 in the same industry. It has an F grade for Stability and Quality.
To see the other ratings of NVVE for Growth, Value, Sentiment, and Momentum, click here.
Siyata Mobile Inc. (SYTA)
Headquartered in Montreal, Canada, SYTA develops and provides cellular-based communications solutions for enterprise customers.
It develops, markets, and sells rugged handheld Push-to-Talk over Cellular smartphone devices for first responders, construction workers, security guards, government agencies, utilities, transportation and waste management, amusement parks, and mobile workers in various industries.
Its trailing-12-month asset turnover ratio of 0.42x is 31% lower than the 0.60x industry average. Its trailing-12-month gross profit margin of 21.92% is 56.5% lower than the 50.35% industry average.
SYTA’s revenue came in at $2.57 million during the third quarter that ended September 30, 2022. Its net operating loss came in at $2.47 million, whereas its net loss for the period came in at $527.95 thousand. Also, its loss per share came in at $0.03.
Street expects SYTA’s revenue for the fiscal year ended December 31, 2022, to decline 7% year-over-year to $7 million. Its EPS for the same year is expected to be negative $0.62. It failed to surpass consensus revenue estimates in each of the trailing four quarters.
Over the past year, the stock has declined 89% to close the last trading session at $0.14.
SYTA has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
It has an F grade for Stability and Quality and a D in Sentiment and Value. It is ranked #62 within the same industry.
Click here for additional ratings of SYTA (Growth and Momentum).
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LAZR shares were trading at $5.75 per share on Thursday afternoon, down $0.13 (-2.21%). Year-to-date, LAZR has gained 16.16%, versus a 7.29% 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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