Luckin Coffee (OTCPK:LKNC.Y): Revisiting Valuation After a Strong Year and Recent Pullback

Luckin Coffee (OTCPK:LKNC.Y) has been quietly rewarding patient investors, with the stock up roughly 49% over the past year even as it dipped about 10% over the past month.

See our latest analysis for Luckin Coffee.

That recent pullback in the share price, including a 1 month share price return of around negative 10 percent, sits against a strong backdrop of roughly 49 percent 1 year total shareholder return. This suggests momentum is pausing rather than breaking.

If Luckin’s run has you thinking about what else could surprise on the upside, this is a good moment to explore fast growing stocks with high insider ownership.

With shares still trading at a sizable discount to analyst targets but coming off a powerful multi year run, investors now face the real question: is Luckin Coffee still undervalued, or is the market already pricing in its future growth?

Most Popular Narrative Narrative: 28.6% Undervalued

Compared with Luckin Coffee’s last close of $35.67, the most popular narrative points to a materially higher fair value anchored in aggressive growth assumptions.

The rapid pace of store expansion, especially growth in both high-tier and lower-tier Chinese cities, combined with persistent urbanization and rising middle-class incomes in China, is likely to continue driving strong top-line revenue growth as Luckin increases its retail footprint and captures a still-untapped market.

Read the complete narrative.

Want to see how this expansion story turns into a lofty valuation? The narrative leans on bold growth, steady margins, and a punchy future earnings multiple. Curious which numbers really carry the weight here?

Result: Fair Value of $49.95 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, surging delivery costs and the risk of store saturation could quickly pressure margins and challenge the upbeat growth and valuation assumptions underpinning this narrative.

Find out about the key risks to this Luckin Coffee narrative.

Another Angle on Value

While the consensus narrative leans on future earnings and growth, today’s price to earnings ratio of 20.7 times paints a milder picture. It sits just below the US Hospitality average of 21.3 times, and well under a fair ratio of 26.8 times, which may hint at potential upside if sentiment improves.

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Luckin Coffee for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 921 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Luckin Coffee Narrative

If you see the story differently or want to stress test the assumptions with your own numbers, you can build a custom take in minutes: Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Luckin Coffee.

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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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