Jul 12, 2022
[5 min Read]
You are probably aware that Canoo Inc. (NASDAQ: GOEV) is a leader in the Auto Manufacturers space. In this analysis, we are going to look at some of the key financial ratios for Canoo to determine a price prediction for GOEV. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my GOEV stock price prediction, then show you the approach and assumptions used to calculate the GOEV stock forecast.
Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable GOEV stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful.
This morning (July 12, 2022), Canoo announced that they reached a deal with Walmart in which Canoo will supply Walmart with 4,500 delivery vans. Furthermore, there is an option in this contract for Walmart to purchase up to 10,000 more units if they desire.
This comes at a time when Walmart is attempting to reach net-zero emissions by 2040 and trying to compete with Amazon by offering one-day delivery. Canoo does not yet manufacture any Electric Vehicles (EV's) however, they are planning to start EV manufacturing in Q4 2022 and start to deliver these EV's at the start of 2023.
This news sent the Canoo (GOEV) stock up as much as 80% in pre-market trading (as of 8 am EST) with over 9M shares traded. This pre-market move is something to be aware of as it is very significant. It will be interesting to see how the GOEV stock will open and close in today's regular market trading period.
The Canoo Inc. stock price prediction of $3.15 was derived from 2 main valuation methods (which are averaged for the final price target you see above). I'll dive into the approach to show you how I determined how I “predicted” a stock price of $3.15 for GOEV.
The Financial growth Metrics provide an analytics valuation approach to determining a reasonable GOEV stock forecast. The comparable companies analysis determines GOEV stock forecast by comparing GOEV's financial ratios to the average financial ratios of a group of similar stocks.
For this part of the analysis, I am looking at the history of key financial metrics for Canoo Inc. to forecast the stock into 2023. Most investors know that historical performance does not guarantee future performance, but it is useful to see how GOEV has been trending.
With GOEV Earnings Per Share estimate for 2023 being -1.48 and the forward GOEV Price to Earnings Ratio being -2.19. By multiplying GOEV's forward P/E and EPS we can arrive at a GOEV stock forecast for 2023 of $3.24 per share
There are other ways to predict the price for GOEV but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast GOEV's stock price.
In order to undergo a comparable analysis, we need to outline GOEV's main competitors. These competitors need to have; a stock, valid financial ratios, operations similar to GOEV, and a market cap similar to GOEV (if possible).
By keeping this in mind, I found the following list of companies to be some of GOEV stocks' closest competitors:
Overall, GOEV stock is undervalued and needs to experience a change in stock price of (an average of) 29.31% to be considered “at fair value”. Applying this percentage change to GOEV's current price of $2.37, implies a forecasted price of $3.06
Analyst Ratings have provided a relatively strong indicator of future price movement, which is why they are used to (hopefully) support our GOEV stock forecast. There are a total of 7 analyst ratings for GOEV, which are distributed as follows:
At first glance, it appears as though analysts are still bullish on the GOEV stock, however, these ratings have not been updated since their large spike in the pre-market trading hours. As a result, it is hard to use these ratings to determine anything, however, we can assume that a good portion of the "buy" ratings would turn into "hold" ratings, and some "hold" ratings would become "sell" ratings.
Should you buy GOEV? Well, based on the overall GOEV stock forecast of $3.15 per share, the underlying analysis, and the current price of GOEV, I would agree with the analysts' previous ratings and say GOEV is a buy. However, given their pre-market jump, I now think that the GOEV stock is overvalued. Let me know what you think, happy to dive into other aspects of GOEV to help you make an informed investment decision.