Beam Global (BEEM) and VivoPower International PLC (VVPR) are two small-cap stocks that are committed to leading the solar industry as developers of innovative solutions. San Diego-based BEEM manufactures electric vehicle autonomous renewable chargers and sells solar powered products and proprietary technology. London-based VVPR provides solar and critical power services in the United States, Australia, and the United Kingdom through Critical Power Services and Solar Development segments.
The growth in renewable forms of energy continues to be a growing global phenomenon, driven by a focus on reducing carbon emissions, which is causing a massive jump in installations. We think BEEM and VVPR are poised to benefit from the industry’s substantial growth.
Both stocks have generated significant returns over the past three years. While BEEM returned 883.7% over this period, VVPR gained 220%. In terms of past-year performance, BEEM is the clear winner with 1483.3% gains versus VVPR’s 783.8% returns. Here is why BEEM is a better pick now:
Latest Movements
BEEM recently completed an agreement with the City of San Diego to host a sponsored network of EV ARC terminals. This agreement will lead to the acquisition of its first sponsor and a significant recurring-revenue business model that could be replicated in other major cities.
On December 17, BEEM announced that the City of Montebello will install two EV ARC solar-powered EV charging terminals to serve city fleet vehicles and act as an emergency preparedness asset. The company expects to witness significant growth acceleration in 2021 as the Federal government joins local governments in aggressively investing in infrastructure to support the sustainable electrification of transportation.
On December 23, VVPR and its subsidiary Tembo e-LV B.V announced a non-binding Heads of Agreement with GB Auto Group Pty Limited and GB Electric Vehicles Pty Ltd for the deployment of several pilot vehicles in Australia, worth $250 million. With growing demand for EV from customers worldwide, the company expects to witness strong long-term growth.
On December 1, the WPR announced that its wholly owned subsidiaries in Australia, J.A. Martin Electrical and Kenshaw Electrical, had completed a refinancing of their funding facilities. This will enhance VVPR’s liquidity and ensure that there is an appropriate financing facility to fund future growth.
Financial Performance
BEEM’s revenue has declined 30.7% year-over-year to $1.24 million for the third quarter ended September 30, 2020 due to delays in the receipt of orders, partially related to the impact of the COVID-19 virus. The company’s cash flow increased 220.4% for the nine-month period to $12.33 million, while working capital grew 170.6% to $13.91 million.
VVPR’s annual group revenues for the fiscal year ended June 30, 2020 grew 12% year-over-year to $48.70 million. The company’s gross profit grew 28% from the year-ago value.
BEEM’s EBITDA grew 56.8% year-over-year. By comparison, , VVPR’s EBITDA increased 120.9% year-over-year.
Profitability
VVPR’s trailing-12-month revenue is more than 10 times BEEM’s. VVPR is also more profitable, with a gross profit margin of 16.1% versus BEEM’s negative values.
Moreover, VVPR’s levered free cash flow margin of 4.5% compares favorably with BEEM’s negative value.
Valuation
In terms of trailing-12-month Price/Sales, BEEM is currently trading at 91.34x, which is much more expensive than VVPR, which is currently trading at 2.58x. Moreover, BEEM’s trailing-12-month EV/Sales of 128.46x is 27.7% higher than VVPR’s 100.62x.
Though BEEM looks much more expensive compared to VVPR, this premium valuation is justified given its superior financials.
POWR Ratings
BEEM is rated “Strong Buy” in our proprietary POWR Ratings system, while VVPR is rated “Sell”. Here are how the four components of overall POWR Rating are graded for BEEM and VVPR:
BEEM has an “A” for Trade Grade, Buy & Hold Grade and Peer Grade, and a “C” for Industry Rank. In the 19-stock Solar industry, it is ranked #4.
VVPR has a “C” for Trade Grade and Industry Rank, a “D” for Peer Grade, and an “F” for Buy & Hold Grade. It is ranked #14 of 19 stocks in the same industry.
The Winner
Both BEEM and VVPR are expected to do well in the long run because of their continued expansion. However, BEEM appears to be a better buy despite trading at a higher valuation based on its better financials.
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BEEM shares were trading at $52.90 per share on Monday morning, down $20.88 (-28.30%). Year-to-date, BEEM has declined -28.30%, versus a -1.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
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