Nio Inc – ADR (NYSE: NIO) shares have lagged the S&P 500 in 2021, generating a year-to-date total return loss of 27.1%.

Nio’s stock has run out of steam in 2021, but value investors may be wondering whether it’s time to buy the dip.

Earnings: A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value.

For comparison, the S&P 500’s PE is currently at about 34, more than double its long-term average of 15.9. Nio doesn’t currently have a PE ratio because the company is not profitable. In the most recent quarter, Nio reported a net loss of $659.2 million.

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Growth: Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 20.3. Unfortunately, analysts are not expecting Nio to turn a profit over the next four quarters. The current consensus earnings per share estimate for Nio for 2022 is a 12-cent loss. Nio’s consumer discretionary sector peers are currently averaging a 29.5 forward earnings multiple.

Yet when it comes to evaluating a stock, earnings aren't everything.

The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is about 1. Once again, without positive earnings, Nio doesn’t have a positive PEG ratio to use as a valuation gauge.

Price-to-sales ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is 3.14, well above its long-term average of 1.62. Nio’s PS ratio is 13.6, more than four times higher than the S&P 500 average. Nio's PS ratio is also up 840.2% over the last two years, suggesting the stock is still priced at the high end of its historical valuation range.

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Finally, Wall Street analysts do see value in Nio stock over the next 12 months. The average analyst price target among the 21 analysts covering Nio is $58.25, suggesting about 60.7% upside from current levels.

The Verdict: At today's price, Nio stock appears to be extremely overvalued based on a sampling of common fundamental valuation metrics.

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