When it comes to future investments, electric vehicles (EVs) are certainly one area where there continues to be interest. However, it can look like that investment should be made further in the future. But that’s not the case if you’re interested in EV producer NFI Group (TSX: NFI).
NFI stock has seen shares absolutely surge in the last few months — especially after its most recent earnings. So, let’s look at what’s been going on with the stock, and what investors still have to look forward to.
Market leader
NFI stock has been a leader in its industry, supplying a wide range of buses and coaches for public transit, private companies, and government agencies. Its market leadership position can indicate stability and potential for long-term growth.
From this, the company has historically produced a strong track record of financial performance. And this hasn’t changed over the last few months.
Now, companies and indeed countries are demanding more alternative and electrically fuelled vehicles, not just for their own personal use but also for public transit and urban mobility. NFI stock has been doing this for years, and as demonstrated in earnings, demand is still high.
Recent earnings
NFI stock recently reported earnings that climbed beyond estimates. In the first quarter (Q1) of 2024, NFI Group reported a revenue of US$723 million, marking a significant increase of 38% compared to the same period in the previous year. This substantial revenue growth indicates the company’s ability to capture market share and generate increased sales.
Furthermore, NFI stock achieved a record-high backlog of 14,783 equivalent units (EUs) valued at US$11.7 billion! This backlog provides visibility into future revenue streams and suggests strong demand for NFI’s products, positioning the company for continued growth.
Yet despite reporting a net loss of US$9 million in Q1 2024, NFI Group demonstrated positive improvement in various financial metrics such as adjusted earnings before interest, taxes, depreciation, and amortization (EBTIDA) of US$34 million and record quarterly performance in the aftermarket segment with US$160 million of revenue and US$38 million of adjusted EBITDA. These positive financial indicators suggest the company’s resilience and potential for future profitability.
Looking ahead
The backlog is one thing, but there is even more growth that the company predicts. NFI Group reaffirmed its financial guidance for Fiscal 2024, including an adjusted EBITDA range of US$240 to US$280 million and a target of greater than US$350 million for 2025 adjusted EBITDA. This reaffirmation signals management’s confidence in the company’s ability to achieve its financial targets and indicates a clear path for growth.
What’s more, management anticipates continued positive improvements in revenue, gross profit, adjusted EBITDA, and free cash flow over the next 12 to 24 months. Strong demand for NFI’s buses, coaches, parts, and Infrastructure Solutions services, as evidenced by record new quarterly orders and a robust backlog, suggests favourable market conditions and growth opportunities.
Overall, NFI stock looks well-positioned for future growth and profitability, making its stock on the TSX a strong buy candidate for investors seeking exposure to the transportation and electric mobility sectors. Yet, as always, it’s essential for investors to conduct their own research and consider their risk tolerance before making any investment decisions.
