What’s Ahead For Kandi Technologies Group Inc (NASDAQ:KNDI)?

Kandi Technologies Group Inc (NASDAQ:KNDI), a US$259.40M small-cap, operates in the automobile industry which is a major consumer of key commodities such as copper and steel, making the car manufacturers and suppliers significant players in the global economy. Upcoming challenges facing the sector is navigating the path from current automobile models to driverless cars, requiring high capital outlays in emerging technology. The limitation of automobile incumbents is an opportunity for tech giants such as Apple and Google to develop their own software components behind networking, autonomous and communication capabilities of automobiles. Automobile analysts are forecasting for the entire industry, a strong double-digit growth of 14.70% in the upcoming year , and a massive growth of 30.39% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. Is now the right time to pick up some shares in automobile companies? Below, I will examine the sector growth prospects, as well as evaluate whether Kandi Technologies Group is lagging or leading its competitors in the industry. Check out our latest analysis for Kandi Technologies Group

What’s the catalyst for Kandi Technologies Group's sector growth?

The growing presence in the auto industry of technology firms incontrovertible. These companies will likely prove to have an immense influence on the auto sector in the coming years, mainly because their skills and the industry’s needs align perfectly – they are proficient at seamlessly connecting components to create networks valued by consumers for the information, efficiencies, and experiences they deliver. In the previous year, the industry saw growth in the teens, beating the US market growth of 9.97%. Kandi Technologies Group lags the pack with its sustained negative earnings over the past couple of years. The company's outlook seems uncertain, with a lack of analyst coverage, which doesn't boost our confidence in the stock. This lack of growth and transparency means Kandi Technologies Group may be trading cheaper than its peers.

Is Kandi Technologies Group and the sector relatively cheap?

The automobile industry is trading at a PE ratio of 14.22x, in-line with the US stock market PE of 18.95x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 15.03% compared to the market’s 10.35%, potentially illustrative of a turnaround. Since Kandi Technologies Group’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Kandi Technologies Group’s value is to assume the stock should be relatively in-line with its industry.

Next Steps:

Kandi Technologies Group has been an automobile industry laggard in the past year. If Kandi Technologies Group has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although it delivered lower growth relative to its automobile peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. However, before you make a decision on the stock, I suggest you look at Kandi Technologies Group's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has KNDI's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Kandi Technologies Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.