Has BYD’s Recent Global Expansion Created a New Opportunity for Investors in 2025?

• Thinking about whether BYD is a bargain right now? Let's dig into what really matters for investors who are curious if this stock is priced right, has more to run, or is already expensive.
• Despite a bumpy ride lately, BYD’s stock is up 5.1% in the past week and 13.3% year-to-date, with an impressive 72.1% return over five years. However, it has dipped 7.0% in the last month.
• Recent headlines have spotlighted BYD's expanding presence in overseas markets and increased competition at home, driving swings in investor sentiment. As the company ramps up international growth and navigates policy shifts in the automotive sector, its share price has responded to both optimism and uncertainty around these developments.
• On valuation, BYD scores just 1 out of 6 checks for being undervalued. This number calls for a closer look at traditional valuation methods, but stick around because at the end of this article, we’ll introduce an even smarter way to cut through the noise.

BYD scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: BYD Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. For BYD, the DCF approach incorporates recent and forecasted Free Cash Flow figures in CN¥, providing a long-term view of the business’s earning power.

Currently, BYD reported trailing twelve-month Free Cash Flow (FCF) of -CN¥29.1 Billion, reflecting significant investment and expansion. Analyst estimates project a sharp turnaround over the next decade, with FCF expected to reach CN¥101.3 Billion by 2035. This growth trajectory includes both analyst forecasts for the early years and more conservative, incremental projections for years further out. This provides a blended and realistic outlook of BYD’s potential cash flow generation.

Using the DCF methodology, BYD’s estimated intrinsic value is HK$111.85 per share. This suggests the stock is trading at a 12.8% discount to its intrinsic value, indicating it appears undervalued relative to its future cash flow prospects.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests BYD is undervalued by 12.8%. Track this in your watchlist or portfolio, or discover 920 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BYD.

Approach 2: BYD Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies, as it shows how much investors are willing to pay today for one unit of current earnings. PE is particularly meaningful when a company has consistent profitability, offering a clear window into investor sentiment and growth prospects.

Growth expectations and risk play a major role in shaping what is considered a “fair” PE ratio. When investors anticipate strong earnings growth and see manageable risks, they are often comfortable with a higher PE. Likewise, higher uncertainty or lower growth typically brings that number down.

For BYD, the current PE sits at 21.1x, which is above the Auto industry average of 18.4x and the peer average of 8.7x. These comparisons give some context, but they do not tell the whole story, especially for a dynamic company like BYD that is expanding rapidly and continuing to invest in the future.

This is where Simply Wall St’s Fair Ratio comes in. The Fair Ratio is a proprietary metric designed to set a more tailored benchmark by factoring in not just the company’s growth, but also profit margins, industry trends, risks, and market cap. Unlike simple peer or industry averages, the Fair Ratio seeks to answer what the PE should be, not just what competitors are trading at.

BYD’s calculated Fair Ratio is 17.3x. With the current PE of 21.1x, this places the stock above its Fair Ratio, suggesting BYD is priced at a premium relative to its fundamental qualities after accounting for its risk and growth profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BYD Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story about what you think will happen to a company like BYD, paired with your estimates for its future revenue, earnings, and margins. Instead of just looking at numbers, Narratives let you connect your perspective—why you think BYD will thrive or face challenges—to a financial forecast and, ultimately, a fair value for the stock.

Narratives are available on Simply Wall St’s platform, within the Community page used by millions of investors, making it easy to create, view, and compare investment stories. This tool empowers you to quickly see how your view stacks up against others and helps you decide if now is the right time to buy, hold, or sell, by comparing your own Fair Value with the current Price.

Best of all, Narratives update dynamically as new news or company results are released, so your assessment is always current. For BYD, you might see one investor forecasting strong overseas growth with a high fair value, while another expects tougher competition and rates it much lower. This clearly shows how different outlooks drive different investment decisions.

Do you think there's more to the story for BYD? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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