BYD (SEHK:1211) has been drifting lower in recent weeks, leaving investors wondering whether this pullback is just market noise or an early signal that sentiment around the Chinese EV giant is shifting.
See our latest analysis for BYD.
At around HK$93.7, the recent slide caps a softer few months for BYD, with a 90 day share price return of minus 17.44 percent, even though its year to date share price return and multi year total shareholder returns still point to solid long term momentum rather than a broken story.
If BYD has you rethinking the wider EV space, it could be a good moment to compare it with other auto names and explore auto manufacturers.
With revenue and earnings still growing and the shares trading below analyst targets, is BYD quietly offering value, or is the current price already baking in the next leg of its global expansion?
BYD trades on a Price to Earnings ratio of 20.1 times at the last close of HK$93.7, a premium that suggests investors are paying up for growth relative to many peers.
The Price to Earnings multiple compares what the market is willing to pay today against the company’s current earnings. This is a key lens for established, profitable automakers and EV leaders like BYD, where ongoing profitability and scale matter as much as raw top line growth.
Relative to its estimated fair Price to Earnings ratio of 14.6 times, the current 20.1 times implies the market is assigning a much richer earnings multiple than our model suggests is warranted. This hints at either confidence in sustained outperformance or simple over optimism.
That premium also stands out when set against the peer average Price to Earnings ratio of 8.7 times and even the broader Asian Auto industry average of 19 times. This underscores that BYD is not just slightly expensive, it is materially more highly rated than many competitors on an earnings basis.
Explore the SWS fair ratio for BYD
Result: Price to Earnings of 20.1x (OVERVALUED)
However, persistent multiple compression or a sharper slowdown in EV demand and policy support could quickly challenge the market’s upbeat assumptions around BYD.
Find out about the key risks to this BYD narrative.
Our DCF model points the other way, suggesting BYD is trading about 15.6 percent below its fair value estimate around HK$111.03. If earnings keep growing near forecasts, could this gap reflect a cautious market, or is it a warning that the cash flow story is too optimistic?
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out BYD 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 914 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.
If you see the numbers differently or want to dig into the details yourself, you can craft a personalised view in just minutes: Do it your way.
A great starting point for your BYD research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
Before you move on, lock in your next opportunities with curated stock ideas on Simply Wall St’s Screener, so potential winners do not slip past you.
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.
Companies discussed in this article include 1211.HK.
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