Tesla Motors Inc, (
) is an American company that designs, manufactures, and sells
electric vehicles and advanced electric vehicle power train
components via its own sales and service network. The company is
engaged in commercially producing a federally-compliant electric
vehicle, the Tesla Roadster, and in addition to developing its
Model S and future vehicle manufacturing capabilities at the Tesla
factories, the company is designing, developing, and manufacturing
lithium-ion battery packs, electric motors, gearboxes and
components both for its vehicles and for its original equipment
These activities occur at its electric power train manufacturing
facility in Palo Alto, Ca, USA, and at the Tesla factory. The
company provides services for the development of electric power
train components and sells electric power train components to other
Lately, TSLA's stock has been winning many races, as the company
really does put the pedal to the metal. The stock price just keeps
moving higher, and TSLA shares recently hit a new high. While many
feel as though the stock might have more room to run, the question
many investors are asking is, 'are Tesla shares overvalued?'
TSLA's stock maintains a forward P/E ratio of 2990.74, which is
through the roof when compared to other Zacks Rank #1 stocks in the
same industry, such as Nissan Motors, (
), and Tata Motors Ltd. (
). NSANY has a forward P/E ratio 9.75, while TTM maintains a
forward P/E ratio of 10.59.
Some say TSLA is overvalued, and that what goes up must come down;
however why is it then, that notable analysts from Stifel Nicolaus
upgraded TSLA to a "buy" rating, with a $400 price target? Bearing
in mind how much TSLA's stock has already gone up over the past two
weeks, this may not seem like the logical thing to do, however,
TSLA's stock seems to have captivated investors' attention once
TSLA is currently a Zacks Rank #1 (Strong Buy) and for good reason.
TSLA's CEO, Elon Musk, has recently disclosed plans of his
intention to construct a "gigafactory," to ramp up production,
which in turn will lead to more sales, gross profit, and income.
The gigafactory will also be responsible for manufacturing
batteries, and it will arguably be the world's largest producer of
The factory will also have an impact on cost-efficiency, as it will
lower the costs of manufacturing Tesla vehicles, and allow for the
proliferation of Tesla automobiles for people who cannot afford
Model S and other ones at this point in time. The factory aims to
push sales upwards of 500,000 electric cars/year, an exponential
boost from today's 35,000/year.
Another important element to consider is how TSLA is faring in the
world's largest auto market, China. Very recently, TSLA has agreed
to a partnership with China's second biggest wireless carrier,
China Unicom (
). TSLA has teamed up with CHU in hopes of cooperating on a
challenge that calls for building and developing charging stations
The deal entails many details, such as 400 charging stations in 120
Chinese cities to be developed, along with supercharging station in
20 larger, and more significant, Chinese cities. TSLA is aiming to
provide the charging equipment while CHU provides the physical
space for the stations themselves. The stations will only service
TSLA automobiles, but will be free of charge.
TSLA has been honing in on China, and trying to generate more sales
to the newly found Chinese middle and upper class. This comes with
approval from the Chinese government, which looks to encourage the
proliferation of more environmentally friendly cars, such as
electric and hybrid automobiles.
TSLA seems to be the perfect pick, especially considering how TSLA
has been the pioneer and revolutionary in electric cars, and in
addition to that, the market for electric cars is faring very well,
as sustainable energy and climate change become imminent problems
in today's world.
TSLA Financials & Conclusion
Despite the revolutionary success of Musk's TSLA, the stock is
consistently judged by many investors to be overpriced and only
attractive for speculators. It seems like TSLA is changing the
world and how consumers perceive electric cars, though the vast
majority of the market is expected to be driving fuel cars during
the upcoming decade, however, if any company can change the world,
it is the one headed by a visionary like Musk.
TSLA's financials have not been doing well at all for quite some
time, and TSLA has its popularity among investors, and beating
estimates, to thank for its strong performance. It is important to
note that TSLA does not pay any dividends to its shareholders, and
does not have any plans to do so in the future. As of (12/31/2013),
TSLA managed to generate sales worth $2,014 million, a gross profit
worth $456 million, and a negative net income of -$74 million. TSLA
maintained a diluted net EPS of -$0.62/share last year.
Despite negative EPS for the current quarter (9/2014), the Zacks
consensus Estimate Trend shows some improvement this year as, TSLA
is expected to produce $0.09 in EPS. TSLA also seems to be able to
surprise EPS estimates on a consistent basis, with a 74.44%
surprise average over the past year.
Analysts have also consistently revised and raised their EPS
estimates for the current year from $0.05/share 30 days ago to
$0.09/share today. TSLA is currently ranked a Zacks Rank #1 (Strong
Buy), and the stock has an Earnings ESP of 50.00%, and a EPS
surprise last quarter of 33.33% suggesting it definitely knows how
to handle earnings season expectations.
As with any stock, serious investors should research and read up on
anything they plan on putting their money into. TSLA is arguably a
strong pick this quarter, but investors may want to err on the side
of caution when playing this volatile stock, as it can be prone to
big moves in short time frames.
If investors want a safer bet, they should perhaps look to TTM or
NSANY, and they should read a detailed comparison between TSLA,
TTM, and NSANY
, just to see which one is more suitable for their outlooks and
risk, though TSLA does seem likely to electrify portfolios in the
near term no matter what else happens with the auto industry.
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TESLA MOTORS (TSLA): Free Stock Analysis Report
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