Rivian Automotive (RIVN) has been among the top-searched stocks on romero.my.id recently. Therefore, it may be worthwhile to examine some factors that could influence the stock's performance in the coming period.
The shares of this vehicle and passenger car producer have increased by +9.4% over the last month compared to the Zacks S&P 500 Composite’s decrease of -0.7%. Rivian Automotive falls under the Zacks Automotive - Domestic industry, which has seen an uptick of 6.9% during this timeframe. So now, the main query is: What might be next for the direction of the stock?
Although media announcements or whispers regarding significant shifts in a company’s business outlook often cause its stock to become trendy and result in swift pricing adjustments, underlying realities typically play a crucial role in determining long-term purchase and retention choices.
Earnings Estimate Revisions
Instead of concentrating on other factors, Zacks emphasizes assessing the shift in a company’s earnings forecast. We do this because we consider the true worth of its stock to be based on the current valuation of its anticipated future earnings stream.
We primarily examine how sell-side analysts adjust their earnings forecasts for a stock based on recent business developments. When these projections increase for a firm, the estimated intrinsic worth of its shares also rises. If this assessed value exceeds the present trading price, it stimulates investor demand to purchase the stock, which can push its price upward. Consequently, numerous studies have found a significant link between fluctuations in earnings forecast adjustments and short-term share price changes.
In the present quarter, Rivian Automotive is anticipated to report a loss of $0.80 per share, reflecting an increase of about +32.8% compared to this time last year. Over the past thirty days, the Zacks Consensus Estimate for their performance has shifted upward by +0.9%.
The projected average loss per share for this fiscal year stands at -$2.87, reflecting an improvement of 29% compared to the previous year. Over the past month, this forecast has been revised downward by 0.5%.
For the upcoming fiscal year, the average projected earnings estimate stands at -$2.12, reflecting an increase of 26.2% compared to what Rivian Automotive was anticipated to post for the previous year. In the last thirty days alone, this estimate has been adjusted upwards by 0.4%.
Boasting a verified history, our exclusive stock evaluation system — known as the Zacks Rank — offers a robust prediction of a stock’s short-term value changes by leveraging shifts in profit forecasts. This assessment incorporates four elements linked to these projections, leading to a Zacks Rank #4 (Sell) designation for Rivian Automotive based on recent adjustments in average analyst predictions.
The table beneath illustrates the progression of the firm's projected 12-month average consensus earnings per share (EPS):
12 Month EPS
Projected Revenue Growth
Although earnings growth is widely considered the best measure of a company’s fiscal well-being, this metric doesn’t hold much weight if the firm fails to boost its sales numbers. Essentially, it becomes exceedingly difficult for a corporation to sustain higher profits over time unless they also see an uptick in their revenue streams. Therefore, understanding a company's capacity for future income expansion is crucial.
For Rivian Automotive, analysts expect net sales of $1.02 billion for the present quarter, marking a 15.1% decrease compared to the same period last year. Looking ahead, forecasts predict revenues of $5.46 billion for the current fiscal year and $7.93 billion for the following year, representing increases of 9.8% and 45.3%, respectively.
Previously Reported Outcomes and Unexpected Developments
In the most recent quarter, Rivian Automotive announced revenues totaling $1.73 billion, marking a 31.9% increase compared to the previous year. The earnings per share (EPS) stood at -$0.52 during this period, which is an improvement from -$1.36 recorded in the prior year.
In comparison to the Zacks Consensus Estimate of $1.43 billion, the recorded revenues showed a positive deviation of 21.5%. Similarly, the earnings per share (EPS) exceeded expectations with a positive difference of 21.21%.
In the past four quarters, the company exceeded EPS forecasts only one time. During this same period, they managed to beat revenue expectations set by analysts twice.
Valuation
Efficient investment decisions cannot be made without evaluating a stock’s valuation. Determining whether the stock's present price accurately represents the inherent worth of the business and aligns with the company's growth potential is crucial for predicting its future price performance.
When you compare a firm’s current valuation metrics like the price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) ratios against their past figures, this can help assess if the stock is correctly priced, overpriced, or underpriced. Additionally, evaluating these same indicators for similar companies provides insight into how reasonably priced the stock truly is within its industry context.
The Zacks Value Style Score, part of the broader Zacks Style Scores system, focuses closely on various valuation measures—both conventional and less common—to rate stocks on an A-to-F scale where an 'A' indicates superior value compared to a 'B', which in turn signifies better value than a 'C,' and so forth. This score proves quite useful for determining if a stock might be overpriced, fairly priced, or potentially underpriced at present.
Rivian Automotive receives an F rating in this area, suggesting that it is valued higher compared to its competitors. To view the figures for various valuation metrics contributing to this score, click here.
Conclusion
The details presented here along with additional information from romero.my.id could assist in deciding whether tracking the market hype around Rivian Automotive is worth your time. Nonetheless, its Zacks Rank of #4 indicates that it might lag behind the overall market performance in the short term.
The article was initially published on Zacks Investment Research (romero.my.id).
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