Is Hyundai Stock a Good Buy? A Smart Investment for the Future of Mobility?

Hyundai Motor Company (HYMTF) is one of the largest automakers in the world, with a diversified portfolio of vehicles, including cars, SUVs, commercial vehicles, and eco vehicles.

The company has been investing heavily in electrification, hydrogen fuel cells, robotics, and mobility services, aiming to become a leader in future mobility.

Is Hyundai Stock a Good Buy?

But is Hyundai stock a good buy for investors?

Let’s take a look at some of the factors that could affect its performance.

Financial Performance

Hyundai has been showing strong financial performance in recent years, despite the challenges posed by the COVID-19 pandemic, the global chip shortage, and the competitive pressure from other automakers.

In 2022, Hyundai’s revenue increased by 21.19% year-over-year to 142.53 trillion KRW, and its earnings increased by 40.23% to 7.98 trillion KRW.

The company also improved its profitability, with its operating margin rising from 3.5% in 2021 to 5.6% in 2022.

Hyundai’s financial ratios and metrics also indicate that the company is undervalued compared to its peers.

As of November 24, 2023, Hyundai’s stock price was $40.97, with a trailing 12-month earnings per share (EPS) of $16.77.

This gives the company a price-to-earnings (P/E) ratio of 2.56, which is significantly lower than the industry average of 13.57.

Hyundai’s forward P/E ratio, based on the estimated EPS for the next 12 months, is even lower at 2.67.

Hyundai also has a low price-to-book (P/B) ratio of 0.54, which means that its market value is less than half of its book value.

Future Prospects

Hyundai has been pursuing an ambitious strategy to transform itself from a traditional automaker to a smart mobility solution provider.

The company has announced its “Strategy 2025” plan, which aims to achieve a 10% share of the global electric vehicle (EV) market and a 5% share of the global hydrogen vehicle market by 2025.

Hyundai also plans to launch 23 new EV models and sell 1 million units annually by 2025.

Hyundai has already made significant progress in its electrification efforts, launching several new models such as the IONIQ 5, the IONIQ 6, the NEXO, and the Tucson Hybrid.

The company has also partnered with various entities to expand its EV infrastructure, such as the Hyundai Motor Group Innovation Center Singapore (HMGICS), which will produce EVs and batteries, and the University College London (UCL), which will collaborate on carbon-free future technologies .

Hyundai’s EV sales have been growing rapidly, reaching 13.3% of its total sales in the third quarter of 2023, up from 7.2% in the same period of 2022.

Hyundai’s NEXO is the world’s first mass-produced hydrogen fuel cell vehicle, and the company has been expanding its presence in the global hydrogen market, such as supplying fuel cell systems to commercial vehicles, ships, trains, and drones.

Hyundai also plans to launch a new hydrogen fuel cell vehicle in 2023, which will have a range of over 800 km and a charging time of less than 20 minutes.

In addition to electrification and hydrogen, Hyundai is also exploring other areas of future mobility, such as robotics, autonomous driving, and mobility services.

Hyundai has developed various robots for different purposes, such as the DAL-e, a customer service robot, the VEX, a wearable exoskeleton, and the TIGER, a transformable intelligent ground excursion robot.

Hyundai has also acquired a majority stake in Boston Dynamics, a leading robotics company, to enhance its capabilities in this field.

It is also developing its autonomous driving technology, aiming to achieve Level 4 autonomy by 2025 and Level 5 autonomy by 2030.

Hyundai is also expanding its mobility services, such as car-sharing, ride-hailing, and subscription, to offer more convenience and value to its customers.

Risks and Challenges

Hyundai is not without risks and challenges, however, as it faces various uncertainties and difficulties in the global automotive industry.

One of the major risks is the ongoing global chip shortage, which has disrupted the production and supply of vehicles worldwide.

Hyundai has been relatively less affected by the chip shortage than its competitors, thanks to its proactive inventory management and diversified supplier network.

However, the company still expects the chip shortage to persist until the first half of 2024, and it may have to adjust its production plans accordingly.

Another risk is the intensifying competition from other automakers, especially in the EV market.

Hyundai faces strong rivals such as Tesla, Volkswagen, Toyota, and General Motors, which have also been investing heavily in electrification and innovation.

Hyundai will have to differentiate itself from its competitors by offering superior products, services, and customer experiences, as well as maintaining its cost competitiveness and quality standards.

A third risk is the regulatory and environmental uncertainty, which may affect Hyundai’s operations and profitability.

Hyundai has to comply with various regulations and standards in different markets, such as emission norms, safety requirements, and trade policies.

 

Conclusion

Hyundai is a well-established and reputable automaker, with a strong financial performance and a low valuation.

The company has also been pursuing a visionary and innovative strategy to become a leader in future mobility, with a focus on electrification, hydrogen, robotics, and mobility services.

Hyundai has a lot of potential to grow and create value for its shareholders, customers, and society.

However, Hyundai also faces some risks and challenges, such as the global chip shortage, the fierce competition, and the regulatory and environmental uncertainty.

Therefore, investors should weigh the pros and cons of Hyundai stock carefully, and do their own research and analysis before making a decision.

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