Workhorse (WKHS) is a pioneer in the electric delivery vehicle space. Its all-electric, composite C-Series Vans boast a 100-mile range and are known for their quality and durability. With the future of package deliveries already here, Workhorse also uses a custom-built drone technology that is fully autonomous and in tandem with all electric vehicles. This boosts safety and efficiency. Furthermore, its Aeres app can be connected directly to HorseFly drones, which also improve the user experience, from start to finish.
With over 381 vehicles and drones on the road, Workhouse Group is one of many clear leaders in last-mile delivery. It is not just about ground transportation, either. The company’s drone service offers another option for people looking to take their packages where they can’t go themselves.
Workhouse boasts over 8 million miles of real-world driving experience and a backlog that has increased to nearly 8,000 vehicles. The company has a team of hard-working associates, from the CEO to production workers, who are dedicated to becoming industry leaders.
The second quarter of 2021 was exceptional for Workhorse Group. Sales were up significantly year-over-year, coming in at $1.2 million compared with last year’s $92,000. This positive uptick can be attributed mainly to the increased number of trucks delivered in that time period. There were fourteen deliveries during the past three months, versus only one truck for all twelve previous months combined, which is an impressive jump. (See WKHS stock charts on TipRanks)
Valuation
While Workhorse is enjoying strong growth momentum and offers cutting edge last mile delivery technology, its rich valuation requires significant future growth to provide satisfactory total returns to current investors. For example, the market is currently pricing the company at 22.4x forward sales and 350x trailing twelve-month sales.
The company is also not profitable, as it ran a $40.2 million EBITDA loss last year and is expected to run an $89 million EBITDA loss this year. While profitability is expected to improve moving forward as the company continues to scale, it is still expected to run a hefty $56.5 billion EBITDA loss in 2022.
Wall Street’s Take
From Wall Street analysts, Workhorse earns a Moderate Buy consensus rating based on 2 Buy ratings, 2 Hold ratings, and 0 Sell ratings in the past 3 months. Additionally, the average Workhorse price target of $12.63 puts the upside potential at 34.22%.
Summary and Conclusions
Workhorse is enjoying rapid revenue growth, thanks to its innovative gaming platform and lengthy growth runway.
That said, despite general Wall Street bullishness on the stock at current prices and the robust growth outlook, investors should keep in mind that the current valuation does require significant growth for the foreseeable future, in order to be justified. That makes the stock somewhat speculative. Additionally, Workhorse is currently generating steep losses and is unlikely to turn a profit anytime soon. As a result, any position taken in the stock should be sized accordingly.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
