Financial Analysis: BYD (OTCMKTS:BYDDY) & Li Auto (NASDAQ:LI)

Li Auto (NASDAQ:LI) and BYD (OTCMKTS:BYDDY) are both large-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Institutional and Insider Ownership

9.9% of Li Auto shares are held by institutional investors. Comparatively, 0.0% of BYD shares are held by institutional investors. 48.5% of Li Auto shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Li Auto and BYD, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Li Auto	3	10	0	0	1.77
BYD	0	1	0	0	2.00

Li Auto currently has a consensus price target of $16.28, indicating a potential upside of 39.16%. Given Li Auto’s higher probable upside, equities research analysts plainly believe Li Auto is more favorable than BYD.

Earnings and Valuation

This table compares Li Auto and BYD”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Li Auto	$16.06 billion	0.72	$160.79 million	($0.67)	-17.46
BYD	$111.84 billion	0.81	$4.54 billion	$0.57	17.75

BYD has higher revenue and earnings than Li Auto. Li Auto is trading at a lower price-to-earnings ratio than BYD, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Li Auto and BYD’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Li Auto	-4.44%	-6.58%	-3.14%
BYD	N/A	N/A	N/A

Risk and Volatility

Li Auto has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, BYD has a beta of 0.1, meaning that its stock price is 90% less volatile than the S&P 500.

Summary

BYD beats Li Auto on 9 of the 13 factors compared between the two stocks.

About Li Auto

Li Auto Inc. operates in the energy vehicle market in the People's Republic of China. It designs, develops, manufactures, and sells premium smart electric vehicles. The company's product line comprises MPVs and sport utility vehicles. It offers sales and after sales management, and technology development and corporate management services, as well as purchases manufacturing equipment. The company offers its products through online and offline channels. The company was formerly known as Leading Ideal Inc. and changed its name to Li Auto Inc. in July 2020. Li Auto Inc. was founded in 2015 and is headquartered in Beijing, the People's Republic of China.

About BYD

BYD Company Limited, together with its subsidiaries, engages in automobiles and batteries business in the People’s Republic of China, Hong Kong, Macau, Taiwan, and internationally. The company operates in two segments: Mobile Handset Components, Assembly Service and Other Products; and Automobiles and Related Products and Other Products. The Mobile Handset Components, Assembly Service and Other Products segment manufactures and sells mobile handset components, such as housings and electronic components; and offers assembly services. The Automobiles and Related Products and Other Products segment is involved in the manufacturing and sale of automobiles, and auto-related molds and components; rail transport and related business; and provision of automobile leasing and after sales services, automobile power batteries, lithium-ion batteries, photovoltaic, and iron battery products. The company develops urban rail transportation business. BYD Company Limited was founded in 1995 and is headquartered in Shenzhen, China.