By: David Moadel
It’s fascinating to have witnessed the change in sentiment over electric delivery van maker Workhorse Group (NASDAQ: WKHS). When WKHS stock was soaring, traders had a love affair with Workhorse — but that didn’t last very long.
Now that the share price has come back to earth, it’s hard to find any Workhorse bulls on Wall Street. Granted, the company has had its share of problems, which informed investors cannot ignore.
However, now that WKHS stock is trading at a significant discount, it’s time to give Workhorse a second look. After all, a reduced share price could mean enhanced value and a better reward-to-risk profile for prospective investors.
Ironically enough, 2021’s last mile could deliver Workhorse’s best results. At the same time, the current share price might be the bottom — and it would be a shame if you missed out on the best part of the electric vehicle ride.
A Closer Look at WKHS Stock
For Workhorse’s long-term investors, early 2021 could be referred to as the “good old days.”
On February 4, WKHS stock topped out at $42.96. Bear in mind, this stock cost less than $1 at one point, back in 2019. Unfortunately, folks who got caught up in the hype phase were severely punished. After peaking in the $40’s, the Workhorse share price embarked on a multi-month slide which, as of mid-October, was still in progress.
At this point, I should also mention that WKHS stock has a five-year monthly beta of 2.76. Since the stock is much more volatile than the broader market, it’s crucial to maintain small position sizes if you choose to invest.
On the positive side, though, Workhorse’s trailing 12-month price-to-earnings ratio is just 23.65. For an electric-vehicle stock, that’s a great value. So, maybe we should be grateful that WKHS stock came down to a very reasonable price point.
A Complaint, but No Progress
Letting go of the problems of the past can be hard to do.
As you may recall, in late February, a coveted United States Postal Service (USPS) contract ended up going to rival Oshkosh (NYSE: OSK). It was, at the time, a massive blow to Workhorse’s stakeholders. Much of the early-2021 rally in WKHS stock was due to rumors that Workhorse was on the verge of winning that USPS contract.
After the contract went to Oshkosh, Workhorse filed a formal complaint with the U.S. Federal Court of Claims against the USPS. Month after month went by, and that complaint made no substantial progress.
Meanwhile, there was a changing of the guard at Workhorse as CEO Duane Hughes was ousted on July 29 and replaced by Rick Dauch, an auto industry veteran.
Let’s Call the Whole Thing Off
Personally, I was glad to bear witness to this C-suite change. Actually, I wanted to see the company generally move in a different direction. On July 9, I begged Workhorse to let go of the past and quit dragging out the USPS contract war.
Finally, my prayers were answered in mid-September. That’s when Workhorse finally withdrew its USPS bid complaint. Even better, the company’s new CEO sent out signals that he’s looking towards the future rather than obsessing over the past.
“By withdrawing our protest, we can… better focus our time and resources on initiatives that we expect will be more productive for our company,” Dauch assured.
I wholeheartedly agree. With that, Dauch added that he’s excited about the “multiple business opportunities ahead for last-mile delivery truck and drone system technologies.”
And by the way, Workhorse recently announced a slew of executive leadership appointments. So, it seems that there will be some new talent at Workhorse – and, we can hope, a more productive direction for the company.
The Bottom Line
WKHS stock is down for sure, but that’s not necessarily a bad thing.
Currently, the stock stands apart due to its low valuation. This window of opportunity might not last for much longer.
Besides, it’s nice to see some changes afoot at Workhorse. The company can finally put the pedal to the metal, now that it’s stopped looking in the rear-view mirror.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
See more from Benzinga
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
