About Mobileye
Beep beep beep-beep beep beep, beep beep beep-beep beep beep.
Pretty much every single time I step onto the bus, the driver pulls away from the stop and begins accelerating towards the windier roads near my humble abode on the way to my university and I will all of the sudden hear that exact sequence of beeping noises sound off near the front of the bus, confused as all get out regarding the weird beeping noise bombarding those on the big blue bus.
However, I’ve recently mustered up the courage to ask one of the drivers what in the world that noise is and they politely explained that it is a sort of lane switching and/or drifting monitor that, you guessed it, beeps voraciously whenever the bus is drifting out of one lane into another in attempts of keeping the driver ultra-alert to what the bus is doing and if they aren’t paying attention as they should be, the mechanism is intended to let the bus driver know, informing them that they should take immediate corrective action.
Interesting, right?
Oh, and Intel used to own Mobileye, so that’s something, too.
Well, whether or not you actually think these are interesting tidbits, this can be categorized as one of the various technological products centered around Mobileye’s advanced driver-assistance systems (ADAS), which just so happens to be one of the company’s core revenue drivers (pun certainly intended, by the way), not to mention its additional work in and surrounding self-driving systems as well.
Based in Jerusalem, Israel (this is one of the few companies that we have analyzed that is headquartered in the region, interestingly enough), Mobileye generates the majority of its revenues through the large, well known vehicle manufacturers, through which it sells its safety and warning products.
Zooming out a bit, it is clear that autonomous driving and vehicles seems to certainly be a part of the future, as it is certainly already part of the roads today, as in Austin, Texas alone there are driverless vehicles roaming populated and congested areas of the city as I type these letters.
Therefore, this can be viewed as a sort of mild, short, intermediate and long-term tailwind propelling this company naturally for the years and perhaps decades to come as with the rise of traffic fatalities and the independent rise of autonomous driving, more and more safety systems will need to be implemented so as to ensure vehicles are operated as safely as possible, with or without humans at the wheel.
A company such as Mobileye is evidently a company that will directly benefit from such trends.
Personally, the whole self-driving car thing isn’t for me, but, hey, sometimes it just doesn’t matter whether I like it or not, but if it appeals to the masses, so be it, because from an objective investor’s standpoint, that is what really matters in this context.
Of course, if it hasn’t already, Mobileye is also probably going to integrate applications of artificial intelligence (AI) into its business model through its software, which just so happens to also be on trend.
Prior to saying much else on this company, given what we like to do around these parts, it is just about the right time to begin our journey into this company’s financials and other relevant figures in discovering whether or not this company’s stock (NASDAQ: MBLY) is worth seriously considering as an investment for your portfolio.
Mobileye’s stock financials
In kicking things off with Mobileye, the company has a market capitalization of $32.8 billion along with a correlated share price of $40.74, a price-to-earnings (P/E) ratio that is not currently available nor displayed along with an annual dividend of $0.00 offered to its shareholders for the time being, all of which frankly doesn’t stun us by any stretch of reality.
More specifically, being that Mobileye is a technology company operating well within an emerging field, this company is likely in the process of burning through some cash in hopes of continuously developing both its current software and related technologies while simultaneously building out new concepts and programs in order to keep the revenue flowing in, and we sure hope there is revenue flowing in.
Lastly on this matter, given the aforementioned facts that Mobileye probably isn’t generating any cash at the moment due to continuously investing in its products and platforms, this company, like other younger technology platforms shouldn’t issue a dividend to investors right now, as it would act as an unnecessary cash drain and if our assumptions are even sort of correct, this company needs cash right now and for the short and intermediate-terms, at least, just in order to merely keep its doors open.
But let’s continue on and base reality off of the exact facts based off of the numbers behind this company.
According to the company’s balance sheet, Mobileye’s executive team is in charge of $15.4 billion in terms of total assets and an astonishingly low amount of total liabilities in the amount of $647 million, which might just actually be the most total asset-heavy, attractive balance sheet that we have ever seen or at least reviewed within one of our previous stock analysis articles.
Let’s just say this company is ready to invest and is seemingly in an exceedingly positive place with respect to maintaining enough cash that it can not only proceed to build out its own business and continue comfortably scaling through existing and even new channels and transportation entities, but also deploy some cash in acquiring some smaller, leaner and perhaps even more technologically advanced autonomous vehicle and driving start-ups that can speed up its process and (hopefully) eventual climb to the top.
At any rate, Mobileye’s balance sheet is in incredible shape, nothing more and certainly nothing less.
Moving right along to the company’s income statement, Mobileye’s total annual revenues since 2019 have thankfully been growing, starting their recent journey at $879 million, rising the next year to $967 million in 2020, nearly $1.4 billion in 2021 to its most recently displayed revenue figure (on TD Ameritrade’s platform) of just south of $1.9 billion, as reported in 2022.
There isn’t really much else to say on the matter except that Mobileye is doing right by growing its revenues, more than likely through the acquisition of new customers such as automobile manufacturers as well as transportation entities, among others, which is a good thing.
Let’s see if (or how much) cash this company is bleeding in the process of obtaining said revenues.
According to the company’s cash flow statement, Mobileye has been losing some cash on a net income basis, however, not nearly as much as we had initially feared, as the company has been apparently hewing down its losses (also referencing since 2019), starting at a relatively weighty net income loss of -$328 million in 2019, clawing itself out of this bad of a hole to a rosier, far better most recent report of -$82 million, which, given this company’s balance sheet, is certainly serviceable (multiple times over, that is), not to mention the mere fact that it has cut down the losses dramatically, which is also a great sign that it is moving towards greater amounts of profitability in the (again, hopefully) not too distant future.
While still on the company’s cash flow statement, it can also be found that Mobileye’s total cash from operations during the same exact years were reported as being positive, ranging from $271 million (2020) and $599 million (2021), which is quite the positive to know that the company has been able to already extract significant amounts of cash from its operations, hinting at the fact that it will hardly have any issues on this front in the quarters and years to come.
Mobileye’s stock fundamentals
Speaking of being able to generate cash and overall profitability, Mobileye is also leading the charge and is well on the way to maintaining this position moving forward, at least, that’s something one could extract from the company’s listed trailing twelve month (TTM) net profit margin (as displayed on TD Ameritrade’s platform), as it is listed as being -2.99% whereas the industry’s respective average is pegged at -12.26%, which makes some sense given that, again, this is an industry that is being heavily invested in at the moment and these continued investments are going to put a short and maybe even an intermediate-term dent in these companies and their TTM net profit margins, as they are being compressed by heavy investment(s).
We are just glad to find that Mobileye has already scored a much better TTM net profit margin than that of the industry’s respective average.
When it comes to the company’s core returns on assets and investments, Mobileye’s, on a trailing twelve month basis (also referencing the figures shown on TD Ameritrade’s platform) both lag the industry’s respective average by a few points, which isn’t all that surprising given that it will take some time for this operator to bear the fruits of its past and current labors given how investment intensive the space is at the moment, so, candidly, we don’t offer much credence to this metric in our overall evaluation of Mobileye, at least for the time being given that the company’s TTM returns on assets and investments are still close to those of the industry’s consolidated average.
Should you buy Mobileye stock?
Outside of my little introductory Mobileye story, this overseas company has a lot of great attributes.
For starters, the company is playing a significant role in disrupting an industry that is ultra-ripe for disruption at the moment, its balance sheet is in excellent, total asset-heavy condition, its year-over-year total revenues have been rising, its total cash from operations have remained positive in recent history and its net income losses are seemingly narrowing, its TTM net profit margin is competitive and that of a leader and its core TTM return metrics are lagging a bit but this was to almost be expected given all of the investments and assets the firm is putting to work, naturally muting its currently available return metrics.
With the continued innovation and investment within the autonomous vehicle space(s) and enhanced vehicle safety segments of the broad and wide transportation market, Mobileye is a company that is certainly in a great place through which it can benefit from such trends and it has the customers and relative financial fortitude to back it up.
All things considered, we feel fine offering the company’s stock (NASDAQ: MBLY) a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.