Based in the People’s Republic of China, Niu Technologies (NIU) is involved in designing, manufacturing, and selling of smart electric-scooters, scooter accessories, lifestyle accessories, and performance upgrade components like wheels and brakes. The company offers RQi and TQi series urban commuter electric motorcycles, professional mountain and road bicycles.
As electric scooters allow riders to maintain a safe social distance from one another, NIU’s global sale has surged during the pandemic. The growth in the international markets was mainly driven by the demand recovery in July and August after COVID-19 disruptions in the second quarter.
The company plans to expand in Europe and the United States, increasing its direct sales capacity instead of relying on third-party distributors. It expects to witness robust demand in those markets, driven by policies supporting electric vehicles and battery technology. Its expansion strategy helped the stock to gain 298.6% year-to-date. This impressive performance combined with several other factors has helped NIU earn a “Buy” rating in our proprietary rating system.
Here’s how our proprietary POWR Ratings system evaluates NIU:
Trade Grade: A
NIU is currently trading above its 50-day and 200-day moving averages of $25.34 and $16.04, respectively, indicating that the stock is in an uptrend. The stock gained 66.4%, over the past three months, reflecting a solid short-term bullishness.
NIU’s revenue increased 21.6% year-over-year to $91.28 million in the second quarter ended June 2020. This impressive revenue performance is primarily attributable to an increase in e-scooter sales in China. Gross profit rose 18% from the year-ago value to $20.96 million. Net income increased 11.5% year-over-year to $8.04 million, while EPS increased 11.8% from the prior-year quarter to $0.05.
Earlier this year, NIU announced the launch of a new entry-level e-bicycle, the Gova series, via an e-commerce platform in the Chinese market. The company also opened five flagship stores in South Korea, Belgium, Italy, and Portugal. This will help the company to strengthen its international market reach.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, NIU is well-positioned. The stock is currently trading just 14.8% below its 52-week high of $37.44.
This bullishness can be attributed to the consistent developments, enriched product portfolio, continued advancement in the international market, and rapid expansions made by the company.
Peer Grade: B
NIU is currently ranked #10 out of 30 stocks in the Technology – Hardware industry. Other popular stocks in this industry are Garmin Ltd. (GRMN), Synopsys, Inc. (SNPS), and Apple, Inc. (AAPL)
GRMN, SNPS, and AAPL gained 20.3%, 58.9%, and 62.6% respectively, year-to-date. This compares to NIU’s 298.6% returns over this period.
Industry Rank: B
The Technology – Hardware industry is ranked #12 out of the 123 StockNews.com industries. The companies in this industry manufacture and sell electronic vehicles, smartphones, computers, cameras, and other such products. Although the pandemic disrupted the global supply chains initially, the demand for products under this industry increased as stay-at-home orders pushed people to adapt to the virtual way of living and learning. Also, the demand for e-scooters rose as more people began to prefer personal vehicles over public commute to ensure proper social distancing amid the pandemic.
Overall POWR Rating: B (Buy)
NIU is rated “Buy” due to its impressive financials, short-and-long-term bullishness, solid price momentum, and underlying industry strength, as determined by the four components of our overall POWR Ratings.
Bottom Line
NIU is well-positioned to soar in the upcoming months despite gaining 298.6% so far this year as the demand for e-scooters rises. Moreover, NIU is all set to expand its presence in Europe and the United States. With an increasing global demand for personal eco-friendly vehicles, the company can witness further growth based on its favorable earnings and revenue outlook.
Analyst sentiment, which gives a good sense of a stock’s future price movement, is pretty impressive for NIU. It has an average broker rating of 1, indicating favorable analyst sentiment. All 5 Wall Street analysts that rated the stock rated it a “Strong Buy”. The consensus EPS estimate of $0.16 indicates a 23.1% improvement year-over-year for the fourth quarter ending December 2020. The consensus revenue estimate of $119.79 million for the fourth quarter indicates a 57.8% increase from the same period last year.
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NIU shares were trading at $34.13 per share on Thursday afternoon, up $2.24 (+7.02%). Year-to-date, NIU has gained 300.12%, versus a 12.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
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