Hi there,
EV is all the rage right now and most are trading near yearly highs - BUS is no exception. This is however, a company with a very inconsistent history. In 2018, it generated $70M in revenue - that dropped to $24.6M in 2019 and over the last 12 months, it only generated $22.8M. Worth noting, it did sign a $40M bus contract for delivery by end of 2020, so it is likely to exit the year with $50M plus revenue if it delivers. It has however, warned that a good portion of its target of delivering 150 vehicles in 2020 has been materially impacted by COVID and that "lack of available shipping containers will shift a portion of this large order to being delivered in the first quarter of 2021".
It also brings to light, the inconsistency of the market and how the timing of orders can impact revenue in a pretty big way. That being said, analysts expect the company to generated $220M in 2021 - a HUGE jump year over year. Can it achieve this number? Well, there is only 1 analyst covering the company - so best to take that with a grain of salt.
The company has 2 products, the Vicinity mid-sized bus and the Vicinity LT - a heavy duty bus. It has been selling buses since 2013 and as mentioned, demand has been very inconsistent. Demand in the light and medium duty bus segment is expected to jump in big way over the next few years. However, there are MANY players getting into this area - so competition is also ramping up.
Currently it has capacity to produce 200 Vicinity LightningTM a year and sees long-term potential to reach 1,000 units a year. One thing we don't have clarity on is backlog - which makes it very difficult to analyze. What we can say is that at 5times sales, and if the company comes even remotely close to generating $200M in revenue next year, it looks decently valued (or on a forward basis quite cheap). It actually isn't trading at insane valuations like others in the EV segment.
Overall, I do like the company but would prefer more transparency into backlog. It is however, well positioned to benefit from a big focus on EVs and government incentives. I'd expect it to be highly volatile and as such, averaging into position is likely the best course of action. It is also not for the defensive investor.
Mat