Tailwinds Strengthen For GreenPower Motor Company
Shares of GreenPower Motor Company (NASDAQ: GP) have experienced many of the ups and downs of the EV market over the past year. Driven by hype more than fundamentals, the ups and downs of the EV market have left many if not all of the EV stocks trade at long-term lows. The difference between GreenPower Motor Company and most of the rest of the EV market is that this company is in production, it's building inventory, and it has demand for its product. More importantly, it's producing revenue and earnings and on track for positive cash flow this year.
The driving force for the company is its focus which is not on passenger vehicles but on safety, public transportation, and recreational vehicles. The RV market, as you know, is booming and growing better than 30% annually, the public transportation and safety vehicle market is also accelerating on rising demand for EV solutions.
"As expected, we experienced a substantial uptick in sales pipeline activity this summer which has culminated in new orders. We've tripled our inventory and now have over 300 vehicles in finished goods or various stages of production including EV Star cargo vans and passenger buses as well as our BEAST all-electric school bus," said Fraser Atkinson CEO of GreenPower.
GreenPower Motors Is About To Have An Explosive Second Half
GreenPower Motors is still a very small company but it's one on the verge of explosive growth. The company reported a mere $2.66 million in net revenue but this is going to grow by high triple digits over the next year. The net revenue is up 17.2% YOY on the rapidly increasing business and that is on a small number of deliveries. The company says it delivered 20 of its Flagship EV star vehicles or chassis during the quarter with over 300 vehicles (of all lines) ready or nearing completion for deliveries this fall.
Moving down the report, the details are equally good. Execs report the company's gross margin improved by nearly 200 basis points to 32% and we expect to see this grow as the company realizes the benefits of scale. SG&A expenses we're also highlighted as they've been cut on a YoY basis and have helped set the company up for real profitability later this year. CEO Fraser Atkinson is expecting the company to produce positive cash flow by the end of the fiscal year and it could happen as soon as the 3rd quarter.
"We are excited that we have commenced deliveries of these to our customers, which will accelerate through the fall. We are on track to achieving our goal of attaining positive quarterly cash flow by the end of this calendar year."
The Analysts Are Bullish On GreenPower Motor
The analysts are bullish on GreenPower motor but there has been very little chatter this year. The most recent note came out in June and included a price target downgrade that puts the stock at $34. Even so, $34 is in the range of the consensus target of $36 which implies 136% of upside for the stock. We expect to see some analyst’s activity in the wake of the report and it should be bullish.
The Technical Outlook: GreenPower Motors Is Putting In A Bottom
Price action in GreenPower Motors has been mixed in the wake of the report but it looks like the bottom is in for this stock. Support appears to be strong at the $15.25 level so we do not I think another selloff is imminent. If anything, price action may retest support before moving higher later in the summer. The fundamental outlook for this company is very positive, the market only needs to see the outlook confirmed in the results to drive the stock higher.
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