Free Trial

Autohome’s Dividend and Buyback Make It a Strong EV Play

Close Up Of Hand Attaching Power Cable To Environmentally Friendly Zero Emission Electric Car - stock image

Key Points

  • Autohome operates platforms connecting China's auto consumers and industry. 
  • It sustains profits, a healthy balance sheet, and a robust dividend. 
  • A new share repurchase program will provide a tailwind for the market over the next eleven months. 
  • 5 stocks we like better than Autohome.

Autohome NYSE: ATHM is an interesting play on China’s EV market that comes without OEM risk. The OEMs are selling cars, but profitability is elusive, and competition is fierce, factors that will continue to influence their price action for the foreseeable future. Autohome, on the other hand, operates platforms connecting the automobile industry to consumers. 

Autohome Today

Autohome Inc. stock logo
ATHMATHM 90-day performance
Autohome
$32.57
-0.01 (-0.03%)
(As of 10/11/2024 08:50 PM ET)
52-Week Range
$21.89
$34.70
Dividend Yield
5.16%
P/E Ratio
15.22
Price Target
$28.00

Autohome websites and apps provide advertising, lead generation, listing, transaction, and insurance services and are tied to the volume of China’s business and not any individual OEM. The salient details are that it makes money today, has a healthy and improving cash flow, and offers an attractive capital return, which makes it more of an investment and less of a trade. 

China’s automobile market estimates are mixed, but expect low-to-mid-single-digit growth this year and next, led by EVs. EV sales are expected to grow by 15% to 20% over the next few years and slowly dominate the existing market. Numerous factors will influence growth, including the recent release of BYD’s OTCMKTS: BYDDF low-priced Seagull model. At roughly $12,000, it is half the cost of existing low-priced options. 

Autohome's Growth Is Slow in 2024: Operational Quality Shines

Autohome’s growth is slow in 2024, sustaining a low-single-digit pace in Q2, but growth is present and expected to improve sequentially and next year. Revenue was driven by increasing user counts offset by sluggish demand impacted by economic headwinds. The critical details include the margin and cash flow, which have improved due to operational quality. Net income grew nearly 3% versus the almost 1% gain in revenue, driving an increase in earnings. The adjusted earnings are up nearly 1000 basis points and are expected to remain solid as the quarter's progress.

Autohome Dividend Payments

Dividend Yield
5.16%
Annual Dividend
$1.68
Annualized 3-Year Dividend Growth
30.97%
Dividend Payout Ratio
79.62%
Recent Dividend Payment
Aug. 21
ATHM Dividend History

Cash flow is another critical detail. Cash flow is positive despite the company’s lean toward technology and marketing, allowing it to sustain a fortress balance sheet and initiate a buyback program. The buyback program is worth $200 million and is expected to be completed within twelve months. The allotment is worth nearly 6% of the market cap, with shares trading near $27.50, and will provide a significant tailwind for the market. 

Autohome’s capital return also includes a substantial dividend. The dividend payment is worth about 6% annually to investors and is expected to be paid in two semi-annual payments through 2026. The payment is roughly 65% of quarterly earnings, a high figure offset by the clean balance sheet. The company has no long-term debt and runs a total liability-to-equity ratio of 0.2x.

Institutions Provide a Tailwind for Autohome Stock

Analyst coverage of Autohome is tepid, but institutional interest isn’t. Institutions have bought this stock on balance for three consecutive quarters and own nearly 65% of it. Major shareholders include Ping An Insurance Group, an online insurance destination in China, which holds about 45% of the stock.

The price action in Autohome stock has struggled for years but shows a clear bottom at $22. The market is moving up from that level, supported by the recent earnings report and subsequent repurchase announcement, and is likely to head higher in the near term. There is some resistance at the $27.50 level, but it will not likely last, given the size of the buyback announcement, strength of cash flow, balance sheet, growth outlook, and dividend. The next target for substantial resistance is near $32 or about 15% of upside.

Autohome ATHM stock chart

→ Retire off just one stock ticker? (From Behind the Markets) (Ad)

Should you invest $1,000 in Autohome right now?

Before you consider Autohome, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Autohome wasn't on the list.

While Autohome currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Ten Starter Stocks For Beginners to Buy Now Cover

Just getting into the stock market? These 10 simple stocks can help beginning investors build long-term wealth without knowing options, technicals, or other advanced strategies.

Get This Free Report
Thomas Hughes
About The Author

Thomas Hughes

Contributing Author

Technical and Fundamental Analysis

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
BYD (BYDDF)N/A$38.05-0.5%N/A24.55N/A
Autohome (ATHM)
2.2717 of 5 stars
$32.570.0%5.16%15.22Moderate Buy$28.00
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Recent Videos

Central Garden & Pet: Niche Focus, Big Growth Potential
Evolv Technologies Stock Up 59%: AI Security & 12-Month Forecast
Housing Prices Soar: These 3 Home Stocks May Benefit

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines