One-glance verdict
Undervalued
$8.20 our estimate vs market $0.51
Wall Street consensus: $5.00 (-39.0% lower than our fair-value estimate)
94% below our estimate, below the bear case
Fundamentals snapshot
SunCar Technology Group Inc.
SDA · NCM · Consumer Cyclical · Auto & Truck Dealerships
Current price
$0.51
52-week range
$0.42 - $2.79
Market cap
$52.15M
Balance sheet
Distressed
0.92x Concerning
Net debt $50.16M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 21.5% last year.
- Reward Returns 3.1% on equity, ahead of 25% of its peers.
- Reward Free cash flow was positive in 1/10 years.
- Risk Net debt grew 37.3% over 3 years.
What this company does
SunCar Technology Group Inc.
SunCar Technology Group runs a mobile app in China that acts as a one-stop shop for car owners, connecting them with insurance policies and services like car washes or oil changes. The company primarily makes money by acting as a digital middleman, earning a fee for facilitating transactions between drivers and the actual service providers. This matters because by creating a convenient business ecosystem (a network of connected services and customers that rely on each other), SunCar aims to become the go-to app for drivers, which can lead to more consistent business.
How the company got here
Founded in 2007, SunCar started with a focus on transforming the car insurance and after-sales service experience in China. A key turning point was its development of cloud-based platforms (online software and services) to digitally connect drivers, insurance companies, and service providers. This positioned them to become a leader in business-to-business (B2B) automotive services. More recently, the company has heavily focused on the electric vehicle (EV) market and has formed partnerships with major EV companies like Tesla, NIO, and XPeng. In May 2023, SunCar became a publicly traded company on the Nasdaq stock exchange.
What it actually does
SunCar provides a technology platform that connects car owners with insurance and a wide range of car services through mobile apps and cloud-based software. Think of it as a one-stop shop for businesses like banks, insurance companies, and car manufacturers to offer these services to their own customers. For the average driver, this means they might use a SunCar-powered app to buy car insurance, or to find and pay for services like a car wash, oil change, or roadside assistance from a large network of local providers. The company primarily operates in China, the world's largest market for passenger cars.
Auto eInsurance Services
This is a major part of SunCar's business, where it facilitates the sale of car insurance policies online. The company partners with large insurance companies and uses its technology platform to help sell insurance, especially for electric vehicles. Instead of selling directly to most drivers, SunCar provides the underlying technology for car companies and other businesses to offer insurance to their customers. This segment has been a significant source of growth, particularly through partnerships with emerging EV manufacturers.
Auto Services
This segment connects car owners with a vast network of over 48,000 independent service providers across China for various needs. These services include routine maintenance like oil changes, car washes, tire repairs, and also on-demand help like roadside assistance or a designated driver. Businesses pay SunCar to give their own customers access to this convenient, all-in-one network. This part of the business is roughly similar in size to its insurance services, and the company focuses on profitable contracts to ensure this segment remains healthy.
Technology Services
This is a smaller but important part of the company where SunCar provides its specialized software and consulting to other businesses. For example, an insurance company might pay SunCar to use its software-as-a-service (SaaS) platform to manage their own insurance products and customers more efficiently. This segment also includes the development of their artificial intelligence (AI) capabilities, which helps them create more advanced products for their partners.
What management is betting on now
SunCar's leadership is heavily focused on artificial intelligence (AI) to make its services smarter and more personalized. They have a strategic partnership with ByteDance (the parent company of TikTok) to develop new AI-powered products for things like matching insurance policies to customers and even analyzing accidents. The company is also betting on the continued growth of the electric vehicle (EV) market in China by deepening its partnerships with major EV manufacturers. Their goal is to be the go-to platform for all the insurance and service needs of EV owners throughout the entire time they own their vehicle.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2023 Q4
$-32.58M
FY2024 Q4
$11.25M
Revenue
$441.90M
Net income
—
Diluted EPS
-0.72
Operating cash flow
$11.84M
Free cash flow
$11.25M
Fetching…
Sources
Revenue
$363.75M
Net income
—
Diluted EPS
-0.31
Operating cash flow
$-27.65M
Free cash flow
$-32.58M
Fetching…
Sources
Is it cheap or expensive?
Fair value $8.20 vs current price $0.51
Wall Street consensus is the average analyst price target: $5.00 (-39.0% lower than our fair-value estimate).
Our most-likely fair value is $8.20 a share — about 1,504.0% above today's price of $0.51, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $50.2M. Interest coverage 0.9x.
Net debt
$50.16M
Interest coverage
0.92x
SunCar Technology Group Inc.'s profit covers its interest bill about 0.9 times over. which is stronger than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
SDA
BASELINE
SunCar Technology Group Inc.
Total debt $85.49M Interest coverage 0.92x This is the baseline the peer rows are being compared against.
Total debt $19.14M Interest coverage -8.33x -100% vs SDA This peer has almost no interest-payment cushion compared with SDA.
Total debt $65.90M Interest coverage 18.31x +1,898% vs SDA Carries about 20.0x more debt cushion than SDA.
Total debt $405.28M Interest coverage -2.19x -100% vs SDA This peer has almost no interest-payment cushion compared with SDA.
Total debt $23.23M Interest coverage 127.11x +13,770% vs SDA Carries about 138.7x more debt cushion than SDA.
What you should know
The case for and against SDA
3 Rewards
1 Risk
Rewards
-
Revenue grew 21.5% last year.
-
Returns 3.1% on equity, ahead of 25% of its peers.
-
Free cash flow was positive in 1/10 years.
Risks
-
Net debt grew 37.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
3.41x
P/B
1.57x
P/S
0.10x
EV/EBITDA
11.38x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
9.5%
Operating margin
2.3%
Net margin
-0.6%
ROE
3.1%
ROA
2.3%
Health
Liquidity and balance-sheet strength
Debt / equity
0.92x
Current ratio
1.28x
Quick ratio
0.57x
Total debt
$85.49M
Total cash
$35.33M
Growth
How the business has been compounding
Revenue TTM
$1.34B
Revenue 5Y CAGR
21.0%
EPS TTM
0.00
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$-57.52M
Free CF TTM
$11.25M
FCF margin
0.8%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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