DC Fast Charger Expansion And European Investments Will Drive Success

Key Takeaways

• Rapid growth in Blink-owned DC fast chargers is expected to drive significant future revenue and improve net margins.
  
• Expansion in Europe and market consolidation strategies could diversify and increase revenue, with potential for market share gain and asset acquisition.
  
• Blink Charging faces profitability challenges, cash flow risks, and operational inefficiencies amid revenue decline, owner-operator transition, and reliance on uncertain regulatory shifts.

Catalysts

Through its subsidiaries, owns, operates, manufactures, and provides electric vehicle (EV) charging equipment and networked EV charging services in the United States and internationally.

• Blink Charging is experiencing rapid growth in its owner-operator model for DC fast chargers and is focusing on increasing its portfolio of Blink-owned chargers, which is expected to drive significant future revenue growth.
  
• The company is experiencing record service revenue growth driven by increased utilization and deployment of Blink-owned chargers, expected to improve net margins as these are higher-margin operations.
  
• Blink is reducing operating expenses and cash burn significantly, enhancing its potential for profitability, expected to contribute positively to future earnings.
  
• The expansion in Europe, with strong EV adoption and continued investments in the U.K.'s LEVI program, provides a significant growth opportunity, expected to diversify and increase revenue streams.
  
• Blink's strategic adjustment toward capitalizing on market consolidation suggests potential for gaining market share and acquiring underpriced assets, which could positively impact future earnings.

Blink Charging Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Blink Charging's revenue will grow by 17.4% annually over the next 3 years.
• Analysts are not forecasting that Blink Charging will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Blink Charging's profit margin will increase from -157.0% to the average US Electrical industry of 10.5% in 3 years.
• If Blink Charging's profit margin were to converge on the industry average, you could expect earnings to reach $21.3 million (and earnings per share of $0.2) by about May 2028, up from $-198.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.5x on those 2028 earnings, up from -0.4x today. This future PE is lower than the current PE for the US Electrical industry at 22.8x.
• Analysts expect the number of shares outstanding to grow by 1.71% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.9%, as per the Simply Wall St company report.

Blink Charging Future Earnings Per Share Growth

Risks

• Blink Charging experienced a decrease in product revenues for 2024, showing a decline to $126.2 million from $140.6 million in 2023, which may signify challenges in sustaining revenue growth if the trend continues.
  
• The company's loss per share, although improved, was still significant at $1.96 for 2024, compared to $3.21 in 2023, indicating ongoing profitability challenges that could impact shareholder returns.
  
• Discussions revealed uncertainties in the owner-operator transition requiring significant capital investment, posing a risk to cash flow and capital availability, particularly given current market conditions.
  
• Despite improved margins, a reliance on tariffs and regulatory shifts affecting production facilities creates risks that can negatively influence future gross profit levels, especially since these factors remain uncertain and dynamic.
  
• The company's need for significant cost reductions and cash burn management highlights underlying operational inefficiencies that may obstruct the path to sustainable profitability and positive earnings.

Valuation

• The analysts have a consensus price target of $2.757 for Blink Charging based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $0.8.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $204.1 million, earnings will come to $21.3 million, and it would be trading on a PE ratio of 17.5x, assuming you use a discount rate of 7.9%.
• Given the current share price of $0.75, the analyst price target of $2.76 is 73.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.