Down 40%, Should You Ditch or Dive Into NFI Stock?

NFI (TSX:NFI) stock looks like it’s gone from bad to worse, but long-term investors may do well to pick it up today and hold for years to come.

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The market is worse than ever, with American banks leading to a huge strain on markets across the world. Canada hasn’t been immune, and it’s left many stocks falling to depths not seen yet this year. That’s included NFI Group (TSX:NFI).

NFI stock has fallen 40% in the last year alone, with the stock only going lower with the recent news about the drop in American banks pushing markets down around the world. But should long-term investors see this as a chance to make a killing, or is it the beginning of the end?

The future of NFI stock

There is definitely a future for those looking to invest in NFI stock. The company focuses on large vehicles, including buses, trucks and more. Further, it’s made a concerted effort to shift towards clean energy solutions, creating electric buses that continue to be shipped around the country.

In fact, it’s not just around our country. NFI stock also received attention after Vice President Kamala Harris visited its New Flyer facility. This came after the announcement its subsidiary launching 55 high-occupancy buses.

What’s more, analysts continue to mark NFI stock as a buy. So, what’s been going on?

Earnings beat

During its most recent earnings report, NFI stock announced results that were in line with consensus estimates as a whole. However, its earnings per share (EPS) came far above estimates. Its fourth-quarter revenue came in at $683 million, with 1,034 units delivered. About 32% of these were battery and fuel cell-electric buses.

For the year, the company brought in $2.1 billion in sales, with 3,039 units delivered, 23% of which were battery and fuel cell-electric buses. Now, it wasn’t all great news, with the company announcing adjusted earnings before interest taxes, depreciation, and amortization (EBITDA) at a loss of $5 million for the quarter, and $59 million for the year. This led to financial guidance that is lower than originally announced. It should reach between $30 million and $60 million for adjusted EBITDA in 2023, followed by $250 million and $300 million for 2024.

While this will slowing but surely see the company get back to profit, there are a few things in its way — namely, inflation. That pressure has created hardships for many companies, but especially those looking to gain momentum from clean energy production. Even so, while it’s bound to be a slow year this year, analysts believe it will soon pick up. So, long-term investors could achieve great returns for their patience.

Bottom line

Right now, it looks like NFI stock may get worse before it gets better. Earnings are set to improve slowly but surely, but definitely on the slower side. Even still, there is a major shift to clean energy production — not just in Canada, but across the world. And NFI stock certainly has many partnerships and acquisitions that will see it grow even further.

Meanwhile, the company does look like a deal for long-term holders. Shares are down 41% in the last year, trading at 0.72 times book value. As we get closer to a focus on companies with clean energy in mind, it’s likely that NFI stock may again rebound to heights not seen since 2018.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends NFI Group. The Motley Fool has a disclosure policy.

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