Is NIO Stock Worth Buying Ahead of Q2 Earnings Release?

China-based EV company NIO Inc. NIO is slated to release second-quarter 2025 results tomorrow, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 30 cents a share on revenues of $2.76 billion. The loss estimate for the second quarter of 2025 has remained unchanged over the past 60 days. The bottom-line projection indicates an improvement from a loss of 34 cents reported in the year-ago period. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of roughly 15%. Image Source: Zacks Investment ResearchFor 2025, the Zacks Consensus Estimate for NIO’s revenues is pegged at $13.7 billion, implying a rise of 50.2% year over year. The consensus mark for the 2025 bottom line is pegged at a loss of $1.02 per share, indicating an improvement from a loss of $1.51/share incurred in 2024. In the trailing four quarters, NIO surpassed EPS estimates once and missed thrice, with the average negative earnings surprise being 33.35%.NIO Inc. Price, Consensus and EPS Surprise NIO Inc. price-consensus-eps-surprise-chart | NIO Inc. QuoteQ2 Earnings Whispers for NIOOur proven model does not conclusively predict an earnings beat for NIO this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.NIO has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.What’s Shaping NIO’s Q2 Results?For the three months ended June 30, NIO delivered 72,056 vehicles, within the company’s guided range. Deliveries increased 25.6% from the year-ago quarter. In the second quarter, the namesake brand sold 47,132 cars, representing a decline of approximately 18% from the same quarter in 2024. Meanwhile, ONVO and Firefly brands delivered 17,081 and 7,843 units, respectively.ONVO—NIO’s mass-market brand—commenced deliveries last September with the model L60 SUV. Meanwhile, Firefly—NIO’s smaller premium EV brand— began deliveries in April.ONVO and Firefly brands have diversified NIO’s product portfolio, with sales gaining momentum.Revenues for the quarter to be reported are expected to have benefited from increased deliveries. We expect revenues from vehicle sales to increase more than 15% year over year. Amid the volume ramp-up and cost optimization of components and supply chains, vehicle margins are on an upward trend. The metric grew to 10.2% in the first quarter of 2025 from 9.2% in the fourth quarter.On the flip side, NIO has been struggling with operational inefficiencies for several quarters. In the last reported quarter, SG&A expenses rose 46.8% year over year. Increased personnel costs and spending on sales and marketing are expected to have hurt the company this time too. An increase in operating expenses may have dented profit margins. Investments in battery swapping stations and store expansion are likely to have adversely impacted cash flow and overall finances.NIO Stock Price Performance & ValuationOver the past six months, shares of NIO have risen 50%, outperforming the industry as well as its close peers — Li Auto LI and XPeng XPEV. While Li Auto has declined 15%, XPeng shares rose nearly 4% during the same timeframe.YTD Price Performance Comparison Image Source: Zacks Investment ResearchFrom a valuation perspective, NIO currently trades at a forward price-to-sales ratio of 0.78, above the industry’s 0.45 but below Li Auto’s 0.93 and XPeng’s 1.36.NIO Looks Undervalued Compared to LI & XPEV Image Source: Zacks Investment ResearchHow to Play NIO Shares NowNIO’s strong vehicle lineup, including ES6, ES8, EC6, ET5, ET7 and ET9, is aiding deliveries. The company is also set to launch its redesigned ES8 later this year. Beyond the NIO brand, its ONVO and Firefly sub-brands are boosting volumes. ONVO has already launched the L60 and L90, with a third model on the way.NIO’s big bet is its battery swap network, part of its Battery-as-a-Service model. This allows drivers to swap out depleted batteries for fully charged ones in just minutes. With more than 3,400 swap stations and more than 26,000 chargers already installed, NIO is building a network that could become a game-changer in EV adoption. The company is even constructing a new facility in Wuhan, with plans to roll out 1,000 new swap stations annually.However, the road to profitability remains steep. NIO posted a massive $3 billion net loss in 2024. The company also expects its losses to narrow gradually in 2025 amid sales growth and cost savings. It aims to achieve its breakeven target in the fourth quarter of 2025, but that target seems a little too ambitious at the moment. The firm's long-term debt to capital ratio stands at 0.76, higher than the industry's 0.28. As such, this may not be the right time for new investors to buy the stock. The stock has already missed earnings expectations in the last three quarters. Investors should wait for clearer signs of financial improvement before jumping into buying the stock. That said, NIO does have long-term growth catalysts, so existing shareholders should stay invested. Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIO Inc. (NIO): Free Stock Analysis Report Li Auto Inc. Sponsored ADR (LI): Free Stock Analysis Report XPeng Inc. Sponsored ADR (XPEV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks