TSLA With Nobias Technology: Case Study on Tesla
Throughout 2022, Tesla (TSLA) shares have posted rare underperformance. However, last week the company posted first quarter earnings results which beat analyst consensus estimates on both the top and bottom lines. Shares rallied on the heels of those results while the Nasdaq sold off and we saw several credible authors/analyst post updated opinions on the company’s shares.
Nobias 5-star rated author, Brandon Michael, recently published an article at Nasdaq.com which highlighted Tesla’s operations.
He wrote, “Being the poster child of the electric vehicle (EV) industry, Tesla would be no stranger to most investors. Put simply, Tesla designs, develops, sells, and leases electric vehicles and energy generation and storage systems. To create an entire sustainable energy ecosystem, it manufactures a unique set of energy solutions, Powerwall, Powerpack, and Solar Roof to enable consumers to transition to a green energy future.”
He continued, “As the automotive industry evolves to become greener, electric vehicles (EVs) have been leading the charge. Therefore, as the EV transition continues to accelerate, EV stocks could be worth a look in the stock market.”
In a recent article titled, “Tesla Is Up By 8%, Here Is Why”, Nobias 4-star rated author, Vladimir Zernov, broke down the company’s recent Q1 results saying, “Shares of Tesla gained strong upside momentum after the company released its first-quarter report. The company reported revenue of $18.76 billion and adjusted earnings of $3.22 per share, easily beating analyst estimates on both earnings and revenue.”
Zernov highlighted Tesla’s margins, which were a big part of the bullish Q1 storyline, saying, “The company noted that its operating margin was 19.2%, which was a material improvement from the operating margin of 14.7% in the fourth quarter of 2021. The comparison on a year-over-year basis is even more favorable, as operating margin was just 5.7% in the first quarter of 2021.”
Looking ahead, Zervov said, “Analysts expect that Tesla will report earnings of $10.56 per share in the current year and earnings of $13.72 per share in the next year, so the stock is trading at 76 forward P/E. However, earnings estimates keep moving higher, so traders are not worried about the rich valuation of the company.” He concluded, “The major improvement in the operating margin may serve as a longer-term positive catalyst for Tesla stock as it shows that the company’s profits could grow at a fast pace.”
TSLA April 2022
Samed Olukoya, a Nobias 4-star rated author, also recently covered Tesla’s Q1 earnings result in a recent article. Regarding the company’s $18.76 billion sales figure, Olukoya wrote, “The amount represents an 81 percent year-on-year increase when compared to $10.4 billion reported in the same period of 2021.” He continued, “According to the manufacturer, $16.86 billion of the total revenue, was generated from its automotive unit, an increase of 87% from the first quarter of 2021.”
Olukoya touched upon the company’s bottom-line results as well, writing, “Tesla also announced a $3.3 billion profit for the quarter under review.” Along these lines, he continued, “The company’s automotive gross margins jumped a record 32.9% while gross profit was $5.54 billion in its main segment.”
Olukoya mentioned that emissions credits helped to bolster the company’s results writing, “On emission credit sales to other automakers, the company filed $679 million, up from $314 million reported in Q4, 2021. Emission credit sales are credit sales to other automakers who make less clean vehicles than is required in the European Union area and the United Sales.” He also touched upon the bullish production outlook that Tesla’s CEO, Elon Musk laid out during the quarterly report.
Olukoya quoted Musk who said, “It seems likely that we’ll be able to produce one and a half million cars this year.”
In his piece, Michael touched upon this production target writing, “Financials aside, Tesla also remains confident in growing its vehicle delivery figures by 50% over 2021 numbers.”
Even with this strong Q1 beat in mind, TSLA shares are down 16.23% on a year-to-date basis. However, this short period of underperformance is a relative blip on the long-term radar for this company. TSLA shares are up 1531% during the last 5 years. They’re up nearly 15,400 during the last decade.
In short, Tesla has been one of the best performing equities in the entire market since its IPO, prompting Nobias 4-star rated author, Howard Smith, to recently pen an article titled, “Is It Too Late To Buy Tesla Shares?”
Howard wrote, “Valuation has always been the knock on Tesla from those who shunned the stock. After today's jump, Tesla is being valued with a market cap of $1.1 trillion. With a net income of about $5.5 billion in 2021, that gives it a trailing price-to-earnings (P/E) ratio of 200.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
However, Howard continued, “But revenue in the first quarter of 2022 soared 81% year over year. And net income in the quarter was $3.3 billion. That elevated P/E will drop quickly if it continues to have results like it just produced. The company itself says it expects vehicle deliveries to be able to grow at a 50% rate annually for several years to come.”
Looking at the Q1 results, Howard said, “Based on the most recent quarter, that might be a conservative prediction.” Ultimately, he concluded, “Investors who buy it would need to have patience and expect volatility, however. That might mean it's not for everyone, but today's stock jump isn't a reason on its own to avoid the stock.”
Overall, the majority credible authors that the Nobias algorithm follows agrees with the bearish sentiment. 65% of recent reports that we’ve seen published by such authors have expressed a “Bearish” bias while credible analysts are bullish.
Looking at the credible Wall Street analysts that we track (only those with 4 or 5-star ratings) the average price target currently is $962. Relative to TSLA’s current share price of $870, this represents limited upside potential.
Therefore, it appears that much of the recent growth has already been priced into TSLA price estimates, though it is certainly possible that we see TSLA’s average price target rise as analysts factor in the recently reported Q1 figures into their evaluation models.
Disclosure: As of the writing of this article, Nicholas Ward has no TSLA position; however, because of TSLA’s Q1 beat, he may initiate a long position in the near future. Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
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Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.