Luckin Coffee (LKNCY) AI Stock Analysis

• Market Cap: $10.43B
• Dividend Yield: N/A
• Average Volume (3M): 2.26M
• Price to Earnings (P/E): 22.0
• Beta (1Y): 0.29
• Revenue Growth: 41.95%
• EPS Growth: 88.82%
• Country: US
• Employees: 33,795
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.07
• Shares Outstanding: 266,231,500
• 10 Day Avg. Volume: 2,575,067
• 30 Day Avg. Volume: 2,260,188
• PEG Ratio: 0.94
• Price to Book (P/B): 0.57
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 3.87
• Enterprise Value/Market Cap: 1.15
• Enterprise Value/Revenue: 0.29
• Enterprise Value/Gross Profit: 0.51
• Enterprise Value/Ebitda: 1.84
• 1Y Price Target: $52.00
• Price Target Upside: 38.67% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• 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

Revenue Growth

Strong revenue growth indicates robust market demand and effective business strategies, supporting long-term financial stability and expansion.

Store Expansion

The significant expansion of store locations enhances market presence and accessibility, driving future revenue growth and competitive positioning.

Cash Flow Generation

Strong cash flow generation supports reinvestment, debt servicing, and strategic initiatives, ensuring financial flexibility and growth potential.

Negative Factors

Rising Coffee Bean Costs

Increased raw material costs could pressure profit margins, necessitating careful cost management to maintain profitability.

Increased Expenses

Rising operational expenses may strain profit margins and require efficiency improvements to sustain financial performance.

Competitive Pressure

Emerging competitors in the beverage market may challenge market share, necessitating strategic investments in brand and marketing.

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	40.81B	34.96B	24.90B	13.53B	7.86B	3.81B
Gross Profit	23.56B	19.44B	13.40B	7.86B	4.25B	1.47B
EBITDA	6.51B	7.32B	5.11B	2.44B	1.67B	-5.33B
Net Income	3.89B	2.97B	2.85B	496.82M	571.05M	-5.28B
Balance Sheet
Total Assets	27.00B	23.10B	18.29B	10.48B	12.31B	9.32B
Cash, Cash Equivalents and Short-Term Investments	7.41B	5.74B	3.49B	3.53B	6.48B	5.06B
Total Debt	6.17B	6.01B	4.97B	1.91B	4.10B	3.00B
Total Liabilities	13.44B	10.05B	10.16B	5.43B	8.68B	6.60B
Stockholders Equity	13.56B	13.05B	8.14B	6.63B	5.15B	2.66B
Cash Flow
Free Cash Flow	4.10B	1.93B	143.73M	-781.20M	-49.77M	-3.20B
Operating Cash Flow	6.40B	4.23B	2.90B	19.82M	123.45M	-2.38B
Investing Cash Flow	-5.69B	-3.21B	-3.45B	-798.05M	337.00K	-1.71B
Financing Cash Flow	-300.00M	333.60M	0.00	-2.28B	1.51B	4.03B

Luckin Coffee Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 37.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LKNCY, the sentiment is Negative. The current price of 37.5 is below the 20-day moving average (MA) of 39.62, below the 50-day MA of 39.04, and above the 200-day MA of 34.99, indicating a neutral trend. The MACD of -0.40 indicates Positive momentum. The RSI at 40.14 is Neutral, neither overbought nor oversold. The STOCH value of 19.61 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	$10.43B	22.04	30.41%	―	41.95%	88.82%
CAVA	69 Neutral	$5.40B	41.93	19.84%	―	23.93%	153.50%
BROS	64 Neutral	$8.79B	107.35	10.53%	―	28.93%	69.59%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
FWRG	55 Neutral	$1.05B	218.15	0.83%	―	17.27%	-76.53%
SBUX	54 Neutral	$93.46B	50.48	―	2.85%	2.81%	―
SG	43 Neutral	$738.82M	―	-26.47%	―	2.43%	-23.25%