Luckin Coffee (LKNCY) AI Stock Analysis

• Market Cap: $10.84B
• Dividend Yield: N/A
• Average Volume (3M): 2.24M
• Price to Earnings (P/E): 22.5
• Beta (1Y): 0.26
• Revenue Growth: 37.78%
• EPS Growth: 58.38%
• Country: US
• Employees: 33,795
• Sector: Consumer Cyclical
• Sector Strength: 74
• Industry: Restaurants
• EPS (TTM): 0.07
• Shares Outstanding: 266,231,500
• 10 Day Avg. Volume: 2,867,854
• 30 Day Avg. Volume: 2,244,823
• PEG Ratio: 0.95
• Price to Book (P/B): 0.57
• Price to Sales (P/S): 0.22
• P/FCF Ratio: 3.87
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 0.32
• Enterprise Value/Gross Profit: 0.77
• Enterprise Value/Ebitda: 2.16
• 1Y Price Target: $44.95
• Price Target Upside: 17.61% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 81 Outperform
• Price Target: ―

Luckin Coffee's overall stock score reflects its robust financial performance, marked by impressive revenue and profit growth and a strong balance sheet. The company benefits from positive momentum in stock prices and favorable technical indicators, although the valuation is on the higher side, indicating investor expectations for future growth. The earnings call further supports a positive outlook with strong guidance and strategic initiatives, despite some potential cost and competitive challenges.

Positive Factors

Client Growth

Client acquisition and activation were massive, with a significant increase in new customers and high customer retention rates.

New Product Launches

New products, including the Kale Fruit & Veggies Tea and fruit-based Americano, have been successful and are expected to drive growth.

Sales Performance

The company's sales increased by 41% year-over-year, exceeding estimates due to better-than-expected same-store sales growth and faster store expansion.

Negative Factors

Costs and Compensation

Operating profit improved significantly, driven by meaningful operating leverage, despite challenges from increased share-based compensation and higher tax rates.

Operating Margins

Surge in delivery expenses and potential subsidies to franchisees may put pressure on operating margins.

Luckin Coffee Business Overview & Revenue Model

Company Description

Luckin Coffee Inc. engages in the retail services of freshly brewed coffee and non-coffee drinks in the People's Republic of China. It also offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers cups, tote bags, and other merchandises. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company provides technical and consultation services; and manufactures materials for products. As of December 31, 2021, it operated 4,397 self-operated stores; 1,627 partnership stores; and 1,102 Luckin Coffee EXPRESS machines. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.

How the Company Makes Money

Luckin Coffee generates revenue primarily through the sale of coffee and other beverages. The company's revenue model is centered around its mobile app, which streamlines the customer experience by allowing users to order and pay for products in advance, reducing wait times and enhancing convenience. A significant portion of its income comes from its extensive network of self-operated stores and pick-up locations, where customers can quickly collect their orders. Additionally, Luckin Coffee has formed partnerships with third-party delivery services to extend its reach and cater to the growing demand for food delivery in urban areas. The company's focus on cost control, competitive pricing, and aggressive expansion strategy has contributed to its ability to capture a substantial share of the Chinese coffee market. Furthermore, Luckin Coffee occasionally engages in marketing promotions and discounts to attract new customers and increase sales volume, which also contributes to its revenue streams.

Luckin Coffee Financial Statement Overview

Summary

Luckin Coffee displays strong financial health with solid revenue and profit growth, a stable and conservative balance sheet, and robust cash flow generation. The company's performance reflects effective management and strategic positioning in the restaurant industry. While the debt level is managed prudently, continued focus on maintaining growth and managing leverage will be crucial for sustaining this trajectory.

Income Statement

Luckin Coffee has demonstrated robust revenue growth, with a significant increase from CNY 24.9 billion in 2023 to CNY 34.5 billion in 2024, marking a 38.5% growth rate. The company maintains strong profitability with a gross profit margin of 59.1% and a net profit margin of 8.5% for 2024. The EBIT margin stands at 10.3%, and the EBITDA margin is 13.3%, indicating efficient operations and cost management. Overall, Luckin Coffee shows impressive growth and stable profitability.

Balance Sheet

The balance sheet reveals a solid equity base with a stockholders' equity of CNY 13.1 billion, up from CNY 8.1 billion in 2023. The debt-to-equity ratio is 0.46, indicating a conservative use of debt financing. The equity ratio is 56.5%, reflecting a strong capital structure. Return on equity is a healthy 22.5%, up from 35.0% in the previous year, showcasing effective use of shareholders' capital. The company appears financially stable with a prudent leverage strategy.

Cash Flow

Luckin Coffee's free cash flow has seen significant growth, from CNY 143.7 million in 2023 to CNY 1.9 billion in 2024, representing a remarkable increase. The operating cash flow to net income ratio is 1.44, highlighting strong cash generation relative to net earnings. The free cash flow to net income ratio of 0.66 indicates good conversion of profits into free cash flow. This strong cash flow position supports potential reinvestment and debt servicing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	37.06B	34.47B	24.90B	13.29B	7.97B	4.03B
Gross Profit	15.65B	20.36B	14.01B	5.28B	2.73B	311.42M
EBITDA	5.56B	4.59B	5.11B	2.40B	1.69B	-5.55B
Net Income	3.54B	2.93B	2.85B	488.25M	578.54M	-5.60B
Balance Sheet
Total Assets	23.71B	23.10B	18.29B	10.48B	12.31B	9.32B
Cash, Cash Equivalents and Short-Term Investments	5.93B	5.74B	3.49B	3.53B	6.48B	5.06B
Total Debt	5.70B	6.01B	4.97B	1.91B	4.10B	3.00B
Total Liabilities	11.53B	10.05B	10.16B	5.43B	8.68B	6.60B
Stockholders Equity	12.18B	13.05B	8.14B	5.05B	3.63B	2.66B
Cash Flow
Free Cash Flow	3.09B	1.93B	143.73M	-781.20M	-49.77M	-3.20B
Operating Cash Flow	5.39B	4.23B	2.90B	19.82M	123.45M	-2.38B
Investing Cash Flow	-2.63B	-3.21B	-3.45B	-798.05M	337.00K	-1.71B
Financing Cash Flow	0.00	333.60M	0.00	-2.28B	1.51B	4.03B

Luckin Coffee Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.22
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LKNCY, the sentiment is Positive. The current price of 38.22 is above the 20-day moving average (MA) of 37.43, above the 50-day MA of 36.34, and above the 200-day MA of 30.27, indicating a bullish trend. The MACD of 0.42 indicates Positive momentum. The RSI at 55.77 is Neutral, neither overbought nor oversold. The STOCH value of 54.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LKNCY.

Luckin Coffee Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LKNCY	81 Outperform	$10.84B	22.46	30.41%	―	37.78%	58.38%
CAVA	79 Outperform	$10.13B	71.87	21.73%	―	32.11%	378.62%
BROS	73 Outperform	$9.45B	150.03	9.99%	―	30.42%	108.41%
SBUX	71 Outperform	$102.53B	39.01	-47.07%	2.64%	0.60%	-35.19%
Sector *	67 Neutral	¥265.09B	13.26	6.53%	2.53%	5.21%	-14.31%
WEN	65 Neutral	$1.91B	10.62	90.40%	8.94%	2.18%	-5.15%
SG	60 Neutral	$1.45B	―	-19.79%	―	11.10%	18.05%