Chinese EV manufacturer XPeng Inc. (XPEV) posted impressive Q4 earnings that beat the top and bottom line, initially sending shares higher Tuesday morning. They’ve since cooled off and settled around even on the day.

The company grew revenue by a whopping 154% to RMB13.05 billion ($1.84 billion). This easily outpaced the FactSet consensus of RMB12.64 billion. The growth in sales was driven primarily by vehicle sales (up 162%), but other services contributed a 71.6% growth rate as well. Total deliveries came in at 60,158 EVs, nearly triple the 22,204 deliveries this time last year.

But the big storyline was the margin turnaround after the company saw a negative 2.7% margin in the 3rd quarter. For Q4, though, the cost-cutting efforts XPeng employed led to a 6.2% gross margin. While still down from the 8.7% gross margin the company reported this time last year, it’s certainly a step in the right direction.

Chief Executive Xiaopeng He says that the company has worked to reduce costs wherever possible by harnessing tech and engineering enhancements. Those efforts are proving to be well spent now, and He says that the company is only getting started. 

XPeng expects deliveries of 21,000 to 22,500 for the first quarter this year, up from just 18,230 during the same period last year. 

This will drive revenue between RMB5.8 billion and RMB6.2 billion, which is an improvement over last year’s RMB4.03 billion. However, it’s a bit below the FactSet consensus of RMB10.69 billion, which could be contributing to the tumble XPEV took this morning. 

There is also still concern surrounding the weak demand for EV in China, the company’s home country. He says that the company is addressing this by pushing the boundaries of innovation and making the allure of EV impossible to ignore. XPeng has plans to launch 10 new models by 2027.

That being said, XPEV had been surging leading into this news – up 8% in the past month. Is it time to buy this stock yet? Not so fast. We’ve dug a bit deeper in the VectorVest stocks software and see reasons to hold off for the time being.

XPEV Still Has Poor Upside Potential, Safety, and Timing Holding it Back

VectorVest saves you time and stress while empowering you to win more trades. It’s all possible through a proprietary stock rating system that tells you what to buy, when to buy it, and when to sell it. You’re given these insights in just 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT). 

Each sits on its own scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. Better yet, the system issues a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s the situation for XPEV:

  • Poor Upside Potential: The RV rating is a comparison of a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. It offers much better insight than a simple comparison of price to value alone. The RV rating of 0.62 is poor for XPEV.
  • Poor Safety: The RS rating is a risk indicator. It’s calculated by analyzing the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 0.72 is also considered poor for XPEV.
  • Poor Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year. The RT rating of 0.60 is poor for XPEV.

The overall VST rating of 0.65 is poor for this stock, and it’s currently rated a hold in the VectorVest system. If you want to learn more about this situation or any other opportunities in the stock market, get a free stock analysis at VectorVest today and trade with confidence and clarity!

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Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. XPEV delivered a solid fourth quarter of revenue and margin growth, and expects to continue that growth into the current quarter. However, the stock still has poor upside potential, safety, and timing.

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