Here is What You Should Know

The chart below shows the evolution of the company’s forward 12-month consensus EPS estimate:

Even though a company’s earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It’s almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company’s potential revenue growth is crucial.

For Rivian Automotive, the consensus sales estimate for the current quarter of $1.31 billion indicates a year-over-year change of -0.5%. For the current and next fiscal years, $4.56 billion and $5.2 billion estimates indicate +2.7% and +14.2% changes, respectively.

Rivian Automotive reported revenues of $874 million in the last reported quarter, representing a year-over-year change of -34.6%. EPS of -$1.03 for the same period compares with -$1.19 a year ago.

Compared to the Zacks Consensus Estimate of $970.69 million, the reported revenues represent a surprise of -9.96%. The EPS surprise was -15.73%.

Over the last four quarters, the company surpassed EPS estimates just once. The company topped consensus revenue estimates two times over this period.

Without considering a stock’s valuation, no investment decision can be efficient. In predicting a stock’s future price performance, it’s crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company’s growth prospects.

Comparing the current value of a company’s valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Rivian Automotive is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Rivian Automotive. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Rivian Automotive, Inc. (RIVN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research