Chargepoint (NYSE:CHPT) is set to rise to around $31.50 per share according to my calculations, up from its Aug. 20 closing price of $21.26. This is my latest valuation of the electric vehicle (EV) charging company and CHPT stock, based on the company’s latest first-quarter earnings and analysts’ future estimates.
However, we should note that I have lowered my target price down from $42.72, when I last wrote about CHPT stock. As you will see below, I am essentially using the same valuation method with different inputs. I have also found that analysts have significantly lowered their out-year forecasts for the company.
For example, in my previous articles, I used analysts’ estimates for 2026 sales of $2.07 billion. However, as of Aug. 20, these same analysts are now estimating just $1.26 billion, according to Seeking Alpha. That is the root cause for the lower estimates.
CHPT Stock: What Chargepoint Is Worth
Chargepoint released an excellent earnings report for Q1 on Jun. 3, indicating sales of $40.5 million, up 24% from $32.8 million in Q1 2020. Now, the company is due to release its Q2 earnings on Sept. 1, for the quarter ending Jul. 31. It will be interesting to see if CHPT keeps its full 2021 sales guidance of $195 to $205 million for the fiscal year ending Jan. 31, 2022.
That aside, though, here is how I derived my target price. As I pointed out above, analysts’ 2026 revenue forecast is now $1.26 billion. So, using a 15% discount rate, bringing this number to the present value from 4.5 years in the future results in a discount factor of 53.316%. This factor is multiplied by the $1.26 billion forecast, giving CHPT a present value of $671.78 million.
Next, we can multiply this valuation by 12 times to derive its market value of $8.06 billion. (This is a much higher multiple than the 8 times multiple we used before.)
Finally, if we subtract the company’s net cash balance, we can derive its market value. As of Apr. 30, Chargepoint had $608.9 million in cash and $109 million in debt, for net cash of $500 million. This means the enterprise value for CHPT stock is $7.56 billion (i.e., $8.06 billion – $500 million).
The problem is, however, that $7.56 billion is only $0.725 billion more than CHPT’s $6.835 billion market value on Aug. 20, according to Yahoo! Finance. I have found in the past that this site has the most accurate market capitalization calculation. This means that CHPT stock is worth roughly 10.6% more, or $23.51 per share.
Where This Leaves Its Value
That in mind, however, we should also note that the company still projects revenue to hit $2.069 billion by 2026. This can be seen on Page 27 of its latest slide deck. Using a 15% discount rate and 12 times multiple results in an EV forecast of $13.2 billion (i.e., $1.1o3 billion x 12). After subtracting $500 million in net cash, the market value forecast is $12.736 billion. This is 86% higher than the Aug. 20 value of $6.835 billion.
Therefore, the average of these two forecasts, $12.736 billion and $7.56 billion, is $10.15 billion, or 48.5% higher. That means that my revised forecast is $31.57 per share.
So far, analysts have slightly higher valuations for CHPT stock. For example, Tipranks reports that eight analysts have an average $35.75 price target for CHPT stock. Yahoo! Finance, which uses Refinitiv survey data, reports an average target of $35.60 for 10 analysts covering Chargepoint.
That said, Chargepoint believes its number of EV charging ports and its revenue will scale directly with the penetration of electric vehicles in the market. They show this on Page 11 and Page 12 of the latest slide deck presentation.
What to Do with CHPT Stock
All told, I have built two valuations here, one based on analysts’ forecasts and the other based on the company’s forecasts for 2026. There seems to be a wide gulf between them. Most investors will want to wait to see what analysts do with their out-year forecasts after Chargepoint reports its Q2 earnings.
If analysts stick with their much lower forecast (i.e., $1.26 billion vs. $2.069 billion for 2026 by the company), then we might revise down the target price. However, we have plenty of time to consider this, as 2026 is 4.5 years in the future.
So, don’t be in any rush when it comes to this name. Yes, CHPT looks like a good potential return around the $31.50 mark, or some 48% over the recent Aug. 20 price. But, even if it takes two years for this to occur, we should see a good return for most investors.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in any of the securities mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
View more information: https://investorplace.com/2021/08/chargepoint-is-set-to-increase-sales-pushing-chpt-stock-higher/