Here's Why BYD Stock Is a Buy Before Earnings

China's BYD Company Ltd (OTC: BYDDY) is scheduled to release its quarterly earnings and 2025 full-year report at the end of March. With the stock down over 17% in the past 12 months, investors have to ask themselves: Should I buy now, buy later, or stay on the sidelines completely?

There are a few reasons I would consider purchasing shares of the world's largest electric vehicle (EV) maker before earnings. Let's get into it.

Image source: Getty Images.

The new EV king

First and foremost, BYD surpassed Tesla (NASDAQ: TSLA) in 2025 to become the world's top-selling EV brand. This isn't just a symbolic change; this has meaningful repercussions as BYD gains recognition and appeals to cost-conscious consumers globally.

While BYD faces increased competition back home in China, it is growing rapidly as an international brand. BYD exported over one million cars outside of China for the first time in 2025. In Europe, BYD captured approximately 4.8% of the total EV market share. This might not seem like a huge percentage, but it represents 271.8% year-over-year growth in the region. BYD's international momentum is real.

All told, BYD sold more than 4.6 million cars last year. This year, it aims to keep international growth strong as it pushes to sell up to 1.6 million cars outside China.

BYD is also focused on improving its own technology. The EV company just unveiled its second-generation Blade Battery. The new battery can charge a vehicle from 10% to 97% in an impressive nine minutes.

Most importantly, BYD is vertically integrated, which could be the key reason to buy the stock sooner rather than later. The EV manufacturer produces nearly 80% of its core components in-house, more than double that of Tesla. This structure gives BYD an advantage in both pricing and margins. Specifically, because BYD began as a battery manufacturer, it excels in innovation and cost efficiency. Batteries are traditionally the most expensive component of an electric vehicle.

An inexpensive entry point

BYD looks undervalued relative to its long-term growth potential. Its forward P/E (price-to-earnings) ratio is just 17, and its PEG (price/earnings-to-growth) ratio is 0.78 as of March 16. These affordable valuation metrics stand in stark contrast to those of American rival Tesla, whose stock is extraordinarily expensive right now.

Of course, there is still considerable risk ranging from the EV market in general to geopolitical challenges, tariffs, and fierce competition within the Chinese EV market. Yet, BYD's current valuation and upcoming earnings could be the catalyst the stock needs. BYD has a long-term vision for global expansion and technological innovation that will be hard to top.

Because BYD is almost fully vertically integrated and gaining momentum across several regions of the world, I think the stock is a buy before these factors are fully reflected in earnings.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.