Lenovo Group (LNVGY) AI Stock Analysis

• Market Cap: $14.12B
• Dividend Yield: 4.14%
• Average Volume (3M): 1.04K
• Price to Earnings (P/E): 10.1
• Beta (1Y): 0.65
• Revenue Growth: 18.43%
• EPS Growth: 71.68%
• Country: US
• Employees: 69,500
• Sector: Technology
• Sector Strength: 81
• Industry: Computer Hardware
• EPS (TTM): 0.15
• Shares Outstanding: 620,233,000
• 10 Day Avg. Volume: 0
• 30 Day Avg. Volume: 1,038
• PEG Ratio: -0.31
• Price to Book (P/B): 3.08
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 7.61
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 77 Outperform
• Price Target: ―

Lenovo Group's overall stock score reflects strong financial health, particularly in cash flow and profitability metrics, despite some pressure on operating margins. The earnings call was positive, highlighting record growth and strategic advancements in AI. While technical analysis shows a bearish trend, the valuation remains attractive, suggesting potential upside for value-focused investors. External challenges such as tariffs are noted, but the company's strategic initiatives and robust performance across segments are key strengths.

Lenovo Group Business Overview & Revenue Model

Company Description

Lenovo Group Limited, an investment holding company, develops, manufactures, and markets technology products and services. It operates through Intelligent Devices Group, Infrastructure Solutions Group, and Solutions and Services Group segments. The company offers commercial and consumer personal computers, as well as servers and workstations; and a family of mobile Internet devices, including tablets and smartphones. It also provides laptops, monitors, accessories, smart home and collaboration solutions, augmented and virtual reality, commercial internet of things, and smart infrastructure data center solutions. In addition, the company manufactures and distributes IT products, computers, computer hardware, and peripheral equipment; and offers IT, business planning, management, supply chain, finance, administration support, procurement agency, data management, intellectual property, and investment management services. Further, it is involved in the retail and service business for consumer electronic products and related digital services; development, ownership, licensing, and sale of communications hardware and software; and develops software and applications. Additionally, the company is involved in motherboard design and system, full-rack assembly across server, storage, and other products; and provides device-, infrastructure-, and software-as-a-service. It operates in China, the Asia Pacific, Europe, the Middle East, Africa, and the Americas. Lenovo Group Limited was founded in 1984 and is based in Quarry Bay, Hong Kong.

How the Company Makes Money

Lenovo generates revenue through several key streams, primarily from its PC and Smart Devices (PCSD) segment, which includes sales of desktops, laptops, tablets, and other smart devices. This segment represents the bulk of Lenovo's income, driven by its strong market presence and brand recognition. Additionally, Lenovo's Data Center Group (DCG) contributes to its revenue by providing servers, storage, and networking products. The Mobile Business Group (MBG) adds to earnings through the sale of smartphones. Significant partnerships, such as those with Intel and Microsoft, enhance product offerings and market reach, further supporting Lenovo's revenue model.

Lenovo Group Financial Statement Overview

Summary

Lenovo's financial performance is solid, with strong cash flow and profitability metrics. The income statement shows consistent growth and efficiency, though there is pressure on operating margins. The balance sheet shows a moderate debt-to-equity ratio and high return on equity, suggesting effective use of equity. However, the low equity ratio indicates a need for monitoring. Cash flow metrics are robust, with significant free cash flow growth and efficient conversion of income into cash.

Income Statement

Lenovo's income statement reveals strong gross profit margins of 16.3% TTM, with a net profit margin of 2.3%. The company has shown resilience with a revenue growth rate of 15.9% from the previous annual report, despite a 7.1% decline compared to two years ago. EBIT and EBITDA margins are 3.4% and 5.0% respectively, indicating stable earnings potential. However, the EBIT margin has decreased from 4.3% two years ago, suggesting some pressure on operating efficiency.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.79, indicating a balanced approach to leveraging. The return on equity stands at 30.7% TTM, showcasing effective use of equity to generate profits. However, the equity ratio is relatively low at 11.2%, suggesting limited equity buffer. The company's total assets have grown, but stockholders' equity has decreased compared to two years ago, posing a potential concern for financial stability.

Cash Flow

Lenovo's cash flow metrics are strong, with a significant free cash flow growth rate of 170.7% TTM, reflecting robust cash generation capabilities. The operating cash flow to net income ratio is 1.75, indicating efficient conversion of income into cash. Additionally, the free cash flow to net income ratio of 1.27 supports the company's healthy cash position. Despite these strengths, there is a need to monitor capital expenditure trends affecting free cash flow.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
65.93B	56.86B	61.95B	71.62B	60.74B	50.72B
	Gross Profit
10.74B	9.80B	10.50B	12.05B	9.77B	8.36B
	EBIT
2.22B	2.01B	2.67B	3.08B	2.18B	1.44B
	EBITDA
3.28B	3.56B	4.15B	4.38B	3.25B	2.43B
	Net Income Common Stockholders
1.54B	1.01B	1.61B	2.03B	1.21B	718.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.12B	3.57B	4.32B	3.96B	3.13B	3.62B
	Total Assets
44.72B	38.75B	38.92B	44.51B	37.99B	32.13B
	Total Debt
3.98B	3.96B	4.36B	5.93B	4.42B	6.44B
	Net Debt
46.87M	401.86M	109.27M	2.00B	1.35B	2.89B
	Total Liabilities
38.58B	32.67B	32.87B	39.12B	34.38B	28.07B
	Stockholders Equity
5.03B	5.58B	5.59B	4.99B	3.56B	4.19B
Cash Flow		Free Cash Flow
1.96B	725.09M	1.22B	2.79B	2.81B	1.26B
	Operating Cash Flow
2.70B	2.01B	2.80B	4.08B	3.65B	2.21B
	Investing Cash Flow
-1.17B	-1.28B	-1.92B	-1.50B	-975.90M	-956.95M
	Financing Cash Flow
-923.43M	-1.34B	-413.78M	-1.76B	-3.23B	-238.49M

Lenovo Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.77
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LNVGY, the sentiment is Negative. The current price of 22.77 is below the 20-day moving average (MA) of 24.44, below the 50-day MA of 24.06, and below the 200-day MA of 25.83, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 40.30 is Neutral, neither overbought nor oversold. The STOCH value of 10.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LNVGY.

Lenovo Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTAP	77 Outperform	$20.46B	17.49	108.51%	2.10%	5.00%	22.19%
LNVGY	77 Outperform	$14.12B	10.08	23.76%	4.14%	18.43%	71.68%
DELL	72 Outperform	$73.87B	17.25	-179.12%	1.67%	7.67%	―
STX	68 Neutral	$25.29B	17.22	-109.27%	2.41%	36.29%	―
WDC	66 Neutral	$17.98B	9.80	28.45%	―	21.22%	―
HPQ	64 Neutral	$23.39B	9.60	84.33%	4.54%	2.08%	-12.41%
Sector *	61 Neutral	$11.56B	10.44	-6.88%	2.93%	7.49%	-8.97%