BYD (SEHK:1211) has caught investor attention after a recent period of mixed share performance, with the stock showing a 3.9% decline over the past day and a 4% decline over the past month.
Over the past 3 months, BYD’s share price shows a 13.5% decline, while the 1 year total return stands at 13.6%. Year to date, the stock has a 3.5% decline, highlighting a different picture for shorter and longer holding periods.
See our latest analysis for BYD.
That recent 1 day and 3 month share price weakness sits alongside a 1 year total shareholder return of 13.6%, so short term momentum looks softer even as longer term holders remain ahead.
If BYD’s moves have you reassessing the auto space, this could be a good moment to compare it with other auto manufacturers that the market is pricing differently.
With BYD trading at HK$95.30 and sitting at a discount to some valuation estimates, the key question is whether the recent share price slide leaves mispriced upside on the table or if the market already reflects future growth.
On a P/E of 20.4x at the last close of HK$95.30, BYD screens as expensive relative to both its own fair P/E estimate and key peer benchmarks.
The P/E ratio tells you how much investors are currently paying for each dollar of earnings, which is a common way to compare auto manufacturers that already generate profits. For BYD, this lens matters because the market is effectively putting a premium tag on its earnings against several relevant reference points.
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Compared with the SWS fair P/E estimate of 14x, BYD’s 20.4x multiple sits meaningfully higher. This indicates that the share price is elevated relative to that fair ratio level that the market could move towards.
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Against the Asian auto industry average of 19x, BYD still trades at a higher multiple, indicating investors are paying more compared with the broader regional group.
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Relative to its peer average P/E of 8.8x, the gap is even wider. This points to a strong premium being placed on BYD’s earnings profile when set against closer competitors.
Across these comparisons, the message is consistent. The current 20.4x P/E represents a materially higher valuation than both industry and peer norms.
Explore the SWS fair ratio for BYD
Result: Price-to-Earnings of 20.4x (OVERVALUED)
However, that premium can unwind quickly if sentiment toward auto manufacturers weakens or if BYD’s earnings do not keep pace with what the current P/E implies.
While the 20.4x P/E makes BYD look expensive versus its 14x fair ratio, our DCF model tells a different story. At HK$95.30, the shares sit about 16.9% below an estimated fair value of HK$114.71. This frames today’s price as a possible discount rather than a premium. So which signal do you trust more for your own process?
Look into how the SWS DCF model arrives at its fair value.
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 877 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 look at the same numbers and reach a different conclusion, or just prefer to test your own view against the data, you can build a full BYD story in just a few minutes with 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.
If BYD has sharpened your thinking, do not stop here. Broaden your watchlist with fresh ideas so you are not relying on a single story.
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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