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  • Earnings
  • electric vehicles

Will earnings justify a potential 61% upside in the Workhorse share price?

Workhorse’s [WKHS] share price has had a bumpy ride in 2021. Since hitting a year-high of $42.92 February, the stock has reversed more than 80% and remains down 51% on the year (through 5 November).

There’s definitely been a sense of one way traffic regarding sentiment around Workhorse’s share price. Considering Workhorse’s share price has slipped a further 4.6% over the past month, investors will definitely need to kick the tyres when it comes to picking up the stock.

Yet, to pass over Workhorse could be missing out on a heavily discounted stock in the electric vehicle market. And with a new CEO behind the wheel of the electric delivery van maker, things could be about to turn a corner.

Tuesday’s third quarter results should provide insight on where the company is heading - and if it’s good news, then Workhorse’s share price could be about to shift gears.

 

What could move Workhorse’s share price post-earnings?

Investors will be looking for new CEO Richard Dauch to outline his strategy on turning around the EV delivery van maker.

Dauch is an industry veteran having held the same position at Delphi Technologies. At the time of the appointment, B. Riley analyst, Christopher Souther, said “Dauch's experience with turnarounds within the auto industry makes him a nice fit for Workhorse as it looks to ramp production.”

Such experience will be needed as Workhorse looks to improve on disappointing second quarter earnings. The company had revised down its full-year production guidance from 1,800 vehicles to 1,000 vehicles on the back of supply chain issues, before removing the revised guidance completely.

Early signs of a change in direction have been positive. In September, Duach ditched Workhorse’s legal wranglings with USPS which were dragging on the company - both in terms of investor sentiment and negative PR.

"By withdrawing our protest, we can... better focus our time and resources on initiatives that we expect will be more productive for our company,” Dauch said.

That said, the February drop was a response to the USPS handing a contract to rival Oshkosh. Workhorse has yet to show that it has an opportunity like that on the cards in the near-future. Without that, a U-turn will be tricky.

Dauch's experience with turnarounds within the auto industry makes him a nice fit for Workhorse as it looks to ramp production” - B. Riley analyst Christopher Souther

 

 

When is Workhorse reporting?

9 November

 

What is Wall Street expecting?

Wall Street is expecting Workhorse to post a loss of $0.35 a share, an improvement on the $0.78 loss seen in the same period last year. Revenue is pegged at $1.18m, down 34.8% on the $1.81m seen last year.

Focusing on earnings and revenue for the individual quarter may be short sighted. More emphasis should be placed on what Duach says regarding the next couple of years and any update on production numbers.

For the full year, analysts expect Workhorse to post revenue of $4.71m, up 238% year-on-year, before accelerating to $83.63M for full year 2022, according to data from Yahoo Finance.

$83.63million

Workhorse's expected revenues for 2022, up from $4.71 expected in 2021

 

Promising stuff. And with Workhorse’s share price trading at under $7 a share, the stock could be in bargain territory. A 5.75 trailing price to earnings ratio is also cheap for an electric vehicle marker.

Improved earnings coupled-up to a strong vision on the future from the new CEO could see Workhorse’s share price back on track, although in getting back to those February highs the stock has a long road ahead.

As it stands, Workhorse’s share price has an average analyst price target of $10.58 - hitting this would see a 61% upside on Friday’s close.

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