Lion Electric Faces Setback with Q3 Losses

The Lion Electric Company (LEV) reported a quarterly loss of $0.15 per share, exceeding the Zacks Consensus Estimate of a $0.13 loss. This marks a decline from a $0.10 loss per share reported a year earlier, with figures adjusted for non-recurring items.

Earnings Surprise and Revenue Decline

This latest quarterly report reveals an earnings surprise of -15.38%. Just one quarter ago, analysts anticipated a loss of $0.12 per share, but the company actually reported a loss of $0.18, a substantial deviation of -50%.

Over the past four quarters, Lion Electric managed to beat consensus EPS estimates only once. For the quarter ending September 2024, the company reported revenues of $30.63 million, which fell short of expectations by 10.77%. This is a sharp decline compared to $80.35 million in revenues from the same quarter last year. Lion Electric has been unable to meet revenue consensus estimates for the last four quarters.

Future stock performance will likely hinge on management’s commentary during the earnings call, shedding light on the sustainability of recent price movements and future earnings prospects.

Since the start of the year, Lion Electric shares have dropped approximately 66%, contrasting with a 21.2% gain in the S&P 500 index.

Potential Directions for Lion Electric

Given Lion Electric’s underperformance this year, investors are left wondering what lies ahead for the stock. Predicting the future is complex, but the company’s earnings outlook can provide some guidance. This outlook considers not only the current consensus earnings expectations for upcoming quarters but also how these estimates have shifted recently.

Research indicates a strong link between short-term stock movements and trends in earnings estimate revisions. Investors can monitor these revisions independently or utilize tools like the Zacks Rank, which has a solid track record of predicting trends based on earnings estimate changes.

Preceding this earnings report, the estimate revisions trend for Lion Electric has been mixed. Although the recent earnings report could alter the trajectory of these revisions, Lion Electric currently holds a Zacks Rank of #3 (Hold), suggesting its performance is expected to align with the market in the near future. Upcoming estimates are crucial; the current consensus for the next quarter is -$0.10 on revenues of $47.74 million, and -$0.41 on revenues of $167.6 million for the full year.

It’s essential for investors to consider the broader industry outlook as it significantly affects stock performance. The Zacks Industry Rank places Automotive – Domestic in the bottom 25% of over 250 Zacks industries. Historical data shows that the top 50% of industries tend to outperform the bottom 50% by a factor of more than 2 to 1.

In the same industry, VinFast Auto Ltd. (VFS) has yet to report its results for the quarter ending September 2024. The company is projected to announce a quarterly loss of $0.24 per share, reflecting an 11.1% year-over-year change. The consensus EPS estimate has remained stable over the past month. Revenues for VinFast Auto Ltd. are expected to reach $787.44 million, an increase of 142.5% compared to the previous year.

Analysts Highlight Promising Stock Picks

Amid these developments, a Zacks Research Chief recently identified a compelling investment opportunity among thousands of stocks. Five Zacks experts have each selected a favorite stock with the potential to skyrocket by over 100% in the months ahead, with the Director of Research, Sheraz Mian, designating one as having the highest upside potential.

This highlighted company targets younger demographics, achieving nearly $1 billion in revenue last quarter alone. Analysts suggest that recent price adjustments present an excellent buying opportunity. While not every top pick proves successful—like Nano-X Imaging, which soared by 129.6%—this stock is positioned for significant growth.

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The Lion Electric Company (LEV): Free Stock Analysis Report

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.