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Why Ford (F) Is a Better Stock to Buy Than Tesla (TSLA) Right Now
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The auto industry is in good shape right now, with strong sales volumes in key markets. Improving macroeconomic conditions, rising employment and consumer confidence as well as low gas prices have been acting as tailwinds for automakers. High incentives and attractive vehicle launches are further aiding sales.
Among the domestic auto manufacturers, two companies often in the limelight are Tesla Motors, Inc. (TSLA - Free Report) and Ford Motor Co. (F - Free Report) . Below, we will take a look at some key statistics from both companies to determine which stock makes for a better investment.
Ford’s Key Strengths
Ford is witnessing strong sales volumes in all major markets. This has been boosting the company’s revenues. The automaker reported better-than-expected earnings and revenues in the first quarter of 2016.
Ford is expanding its production capacity in many emerging markets to facilitate supply and reduce costs. It is also turning toward capital deployment to boost shareholder value.
Further, Ford’s accelerated product transformation plan “One Ford” is positively impacting results. It launched a record 16 vehicles in North America and 24 new or significantly refreshed products globally in 2014. It also launched 16 vehicles globally in 2015 and plans to launch another 12 products worldwide this year.
Additionally, Ford plans to invest $4.5 billion toward its electrified vehicles goal by 2020. The company intends to introduce 13 new electrified vehicles by 2020 and expects that 40% of its portfolio will have electric versions by then.
However, weakness in South America, along with frequent product recalls and rising structural expenses, are some concerns for Ford.
What’s Up at Tesla?
Tesla has acquired substantial market share within the niche electric car market. Model S was the highest-selling premium sedan in the U.S last year. It was also the market share leader in North America and Europe among all comparably priced sedans in the first quarter of 2016. The company is witnessing growing sales on the back of the strong performance and impressive design of its products.
Tesla is actively undertaking international expansion and investing in stores, service centers and its Supercharger network to grow its business. It is also working toward increasing production volume to meet the rising demand for its products. And Tesla is moving to purchase SolarCity following an announcement Tuesday, which would bring together two of Elon Musk’s biggest brainstorms for roughly $2.8 billion.
In order to deal with the shortage of lithium-ion batteries, Tesla is building a Gigafactory in Nevada. By 2020, the automaker expects the annual lithium-ion battery production of the facility to exceed the global production of 2013.
However, the biggest negative for Tesla is that it remains a loss-making company. Last year, CEO Elon Musk revealed that the company may not achieve net profits until Model 3 enters full-scale production. The losses are expected due to the significant investments made toward developing new vehicles and technologies, and the establishment of a retail network. Opposition to its direct-selling model in some U.S. states, supply chain problems and high expenses are other concerns.
Zacks Rank and Style Score
Ford currently carries a Zacks Rank #3 (Hold) and a VGM score of ‘A’. It has a Zacks Style Score of ‘A’ in both Value and Growth, and ‘C’ in Momentum.
Tesla holds a Zacks Rank #4 (Sell), with a VGM score of ‘F.’ It has a Zacks Style Score of ‘F’ in both Value and Growth, and ‘C’ in Momentum.
Value Comparison
Ford has a beta of 1.37 and doles out a dividend yield of 4.47%. The company is trading at a forward P/E of 6.3 and price to sales (P/S) of 0.3, both lower than the respective industry averages of 9.7 and 0.6.
Tesla has a beta of 1.35. The company does not give out any dividend. It has a P/S of 6.9, which is significantly higher than the industry average.
Earnings and Growth Comparison
Ford’s earnings per share (EPS) are expected to grow 7.98% year over year for 2016. Tesla’s loss is projected to reduce significantly in 2016 compared to last year.
In the last 60 days, 8 analysts have raised their earnings estimates for Ford for this year. 60 days ago, the Zacks Consensus Estimate for EPS for this year was $1.94. However, our estimate has been updated since then, and now calls for earnings of $2.08 per share. Notably, Ford has beaten the consensus estimate in three of the last four quarters, with an average positive surprise of 27.70%.
Both analysts covering Tesla raised its loss per share estimate for this year over the last 60 days. Tesla’s loss was projected to be 27 cents per share 60 days ago, according to the Zacks Consensus Estimate. Now, our consensus estimates that we’ll be seeing a loss of $1.72 per share in 2016. Tesla has missed our estimate in three of the last four quarters, resulting in an average negative surprise of 84.91%.
As you can see, Ford outshines Tesla in almost all growth and value comparisons. This bellwether enjoys strong growth potential, compelling fundamentals, an impressive Zacks Rank and Style Score, and solid earnings projections.
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Why Ford (F) Is a Better Stock to Buy Than Tesla (TSLA) Right Now
The auto industry is in good shape right now, with strong sales volumes in key markets. Improving macroeconomic conditions, rising employment and consumer confidence as well as low gas prices have been acting as tailwinds for automakers. High incentives and attractive vehicle launches are further aiding sales.
Among the domestic auto manufacturers, two companies often in the limelight are Tesla Motors, Inc. (TSLA - Free Report) and Ford Motor Co. (F - Free Report) . Below, we will take a look at some key statistics from both companies to determine which stock makes for a better investment.
Ford’s Key Strengths
Ford is witnessing strong sales volumes in all major markets. This has been boosting the company’s revenues. The automaker reported better-than-expected earnings and revenues in the first quarter of 2016.
Ford is expanding its production capacity in many emerging markets to facilitate supply and reduce costs. It is also turning toward capital deployment to boost shareholder value.
Further, Ford’s accelerated product transformation plan “One Ford” is positively impacting results. It launched a record 16 vehicles in North America and 24 new or significantly refreshed products globally in 2014. It also launched 16 vehicles globally in 2015 and plans to launch another 12 products worldwide this year.
Additionally, Ford plans to invest $4.5 billion toward its electrified vehicles goal by 2020. The company intends to introduce 13 new electrified vehicles by 2020 and expects that 40% of its portfolio will have electric versions by then.
However, weakness in South America, along with frequent product recalls and rising structural expenses, are some concerns for Ford.
What’s Up at Tesla?
Tesla has acquired substantial market share within the niche electric car market. Model S was the highest-selling premium sedan in the U.S last year. It was also the market share leader in North America and Europe among all comparably priced sedans in the first quarter of 2016. The company is witnessing growing sales on the back of the strong performance and impressive design of its products.
Tesla is actively undertaking international expansion and investing in stores, service centers and its Supercharger network to grow its business. It is also working toward increasing production volume to meet the rising demand for its products. And Tesla is moving to purchase SolarCity following an announcement Tuesday, which would bring together two of Elon Musk’s biggest brainstorms for roughly $2.8 billion.
In order to deal with the shortage of lithium-ion batteries, Tesla is building a Gigafactory in Nevada. By 2020, the automaker expects the annual lithium-ion battery production of the facility to exceed the global production of 2013.
However, the biggest negative for Tesla is that it remains a loss-making company. Last year, CEO Elon Musk revealed that the company may not achieve net profits until Model 3 enters full-scale production. The losses are expected due to the significant investments made toward developing new vehicles and technologies, and the establishment of a retail network. Opposition to its direct-selling model in some U.S. states, supply chain problems and high expenses are other concerns.
Zacks Rank and Style Score
Ford currently carries a Zacks Rank #3 (Hold) and a VGM score of ‘A’. It has a Zacks Style Score of ‘A’ in both Value and Growth, and ‘C’ in Momentum.
Tesla holds a Zacks Rank #4 (Sell), with a VGM score of ‘F.’ It has a Zacks Style Score of ‘F’ in both Value and Growth, and ‘C’ in Momentum.
Value Comparison
Ford has a beta of 1.37 and doles out a dividend yield of 4.47%. The company is trading at a forward P/E of 6.3 and price to sales (P/S) of 0.3, both lower than the respective industry averages of 9.7 and 0.6.
Tesla has a beta of 1.35. The company does not give out any dividend. It has a P/S of 6.9, which is significantly higher than the industry average.
Earnings and Growth Comparison
Ford’s earnings per share (EPS) are expected to grow 7.98% year over year for 2016. Tesla’s loss is projected to reduce significantly in 2016 compared to last year.
In the last 60 days, 8 analysts have raised their earnings estimates for Ford for this year. 60 days ago, the Zacks Consensus Estimate for EPS for this year was $1.94. However, our estimate has been updated since then, and now calls for earnings of $2.08 per share. Notably, Ford has beaten the consensus estimate in three of the last four quarters, with an average positive surprise of 27.70%.
FORD MOTOR CO Price, Consensus and EPS Surprise
FORD MOTOR CO Price, Consensus and EPS Surprise | FORD MOTOR CO Quote
Both analysts covering Tesla raised its loss per share estimate for this year over the last 60 days. Tesla’s loss was projected to be 27 cents per share 60 days ago, according to the Zacks Consensus Estimate. Now, our consensus estimates that we’ll be seeing a loss of $1.72 per share in 2016. Tesla has missed our estimate in three of the last four quarters, resulting in an average negative surprise of 84.91%.
TESLA MOTORS Price, Consensus and EPS Surprise
TESLA MOTORS Price, Consensus and EPS Surprise | TESLA MOTORS Quote
Bottom Line
As you can see, Ford outshines Tesla in almost all growth and value comparisons. This bellwether enjoys strong growth potential, compelling fundamentals, an impressive Zacks Rank and Style Score, and solid earnings projections.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>