Cash Machine Trading Cheap – BETA Technologies Stock Set to Run?
We think BETA Technologies (BETA) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
What Is Happening With BETA
BETA stock is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to significant operating losses, aircraft certification delays, and a high IPO valuation relative to its pre-revenue status.
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The stock may not reflect it yet, but here is what’s going well for the company: BETA secured a $1 billion motor supply deal with Eve Air Mobility, complementing a $3.5 billion backlog for 891 aircraft. It holds $687.6 million in cash, has low debt-to-equity (0.26), and analyst targets indicate significant undervaluation.
BETA Has Strong Fundamentals
- Cash Yield: BETA Technologies offers an impressive cash flow yield of 0.0%.
- Growing: Revenue growth of 0.0% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: BETA stock is currently trading at 54% below its 3-month high, 55% below its 1-year high, and 55% below its 2-year high.
Below is a quick comparison of BETA fundamentals with S&P medians.
| BETA | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Aerospace & Defense | – |
| Free Cash Flow Yield | � | 4.0% |
| Revenue Growth LTM | � | 6.4% |
| Operating Margin LTM | � | 18.8% |
| PS Ratio | � | 3.4 |
| PE Ratio | � | 24.9 |
| Discount vs 3-Month High | -53.6% | -2.9% |
| Discount vs 1-Year High | -54.6% | -7.7% |
| Discount vs 2-Year High | -54.6% | -10.6% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While BETA stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. BETA fell 65% in the Dot-Com crash, dropped 58% during the 2008 Financial Crisis, and slid 55% in the 2022 inflation downturn. Even during milder sell-offs like 2018 and the Covid crash, it lost over 20%. So, despite solid fundamentals, BETA isn’t immune to big hits when the market turns sour. Risk remains real.
Other Stocks Like BETA
Not ready to act on BETA? You could consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Positive revenue growth
- High free cash flow yield
- Meaningful discount to 3M, 1Y, and 2Y highs
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:
- Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
- Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods
Smart Investing Begins With Portfolios
Single stocks swing wildly but staying invested matters. A well built portfolio helps you stay invested, captures upside and softens the blows from individual stocks.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.