While Tesla, Inc. (TSLA) has become the world’s best-selling and most valuable automaker, Beam Global (BEEM) is an emerging player in electric vehicle (EV) charging technology. TSLA manufactures and sells electric vehicles and energy generation and storage systems internationally. The company operates in two segments — Automotive and Energy Generation and Storage. BEEM manufactures solar products and technology solutions, focusing on various verticals, such as electric vehicle charging infrastructure. It offers electric vehicle autonomous renewable charger products.
Rising levels of carbon emissions from conventional vehicles have triggered the need for EVs, which are more energy efficient, with zero carbon emissions. As a result, the demand for EV charging infrastructure from commercial and individual users is solid. With the primary impetus for EVs now being decarbonization to address climate change concerns, the electric car industry is expected to charge ahead. Hence, leading EV charging stocks like TSLA and BEEM, having strong balance sheets, are well-positioned to benefit from the industry’s substantial growth.
Both stocks have generated significant returns over the past five years. While TSLA returned 1922.8% over this period, BEEM gained 990.4%. In terms of performance over the past six-months, BEEM is the clear winner with 506.8% in gains versus TSLA’s 175% returns. But which of these stocks is a better pick now? Let’s find out.
On January 2, TSLA announced that it produced and delivered 500,000 vehicles in 2020. In addition, production of the company’s Model Y has commenced in Shanghai, with deliveries expected to begin shortly.
The company plans to roll out Tesla Cybertruck, Semi, and Roadster this year. Its electric pickup truck factory, the Gigafactory, is currently under construction and could be ready to produce vehicles as soon as May. Moreover, last month TSLA was finally added to the S&P 500 Index after five consecutive quarters of profit.
On January 7, BEEM announced that the City of Santa Clara, in partnership with Silicon Valley Power, had deployed its EV ARC solar-powered EV charging systems for city fleet vehicles and public use. This collaboration should help BEEM’s EV charging solution stand out in the market and contribute to the company’s overall development.
BEEM recently completed an agreement with the City of San Diego to host a sponsored network of EV ARC terminals. The agreement should lead to the acquisition of its first sponsor and a significant recurring-revenue business model that could be replicated in other major cities.
Recent Financial Results
In the third quarter, ended September 30, 2020, TSLA’s revenue increased 39% year-over-year to $8.77 billion. This can be attributed to substantial growth in vehicle deliveries and growth in other parts of the business. Its non-GAAP net income increased 155.5% year-over-year to $874 million, while its EPS rose 105.4% from the year-ago value to $0.76.
The company’s automotive revenue grew 42% from the prior-year quarter to $7.61 billion. Its gross margin rose 253 basis points sequentially to 23.5% in the third quarter, and its free cash flow rose 276% from the year-ago value to $1.40 billion over this period.
BEEM’s revenue has declined 30.7% year-over-year to $1.24 million for the third quarter ended September 30, 2020 due to delays in the receipt of orders partially related to the impact of the COVID-19 virus. The company’s cash flow increased 220.4% for the nine-month period to $12.33 million, while working capital grew 170.6% to $13.91 million.
Here TSLA is in an advantageous position.
Past and Expected Financial Performance
TSLA’s revenue and total assets grew at a CAGR of 37.9% and 17.6%, respectively, over the past three years. The company’s EBITDA grew 84.6% year-over-year.
Analysts expect the company’s revenue to increase 59.8% in the current quarter, and 47.3% in 2021. TSLA’s EPS is expected to grow 282.6% in the current quarter and 70.9% in the current year.
In comparison, BEEM’s revenue and total assets grew at a CAGR of 18.9% and 106.6% over the past three years. The company’s EBITDA has increased 56.8% year-over-year.
Analysts expect BEEM’s revenue to increase 82.6% in the current quarter and 233.7% in 2021. The company’s EPS is expected to grow 44.4% in the current quarter and 75.4% in the current year.
TSLA’s trailing-12-month revenue is much higher than BEEM’s. Moreover, TSLA is more profitable, with a gross profit margin of 21.1% versus BEEM’s negative returns.
In terms of trailing-12-month price/sales, BEEM is currently trading at 87.07x, 214.3% more expensive than TSLA, which is currently trading at 27.70x. Though BEEM is less expensive in terms of trailing-12-month price-to-book (32.01x versus 50.23x), its trailing-12-month EV/sales of 122.36x is 327.1% higher than TSLA’s 28.65x.
Thus, TSLA is the more affordable stock here.
TSLA is rated “Strong Buy” in our proprietary POWR Ratings system, while BEEM is rated “Buy”. Here are how the four components of overall POWR Rating are graded for TSLA and BEEM:
TSLA has an “A” for Trade Grade, Buy & Hold Grade, Peer Grade and Industry Rank. In the 51-stock Auto & Vehicle Manufacturers industry, it is ranked #1.
BEP has an “A” for Trade Grade, a “B” for Buy & Hold Grade, and a “C” for Peer Grade and Industry Rank. It is ranked #10 of 17 stocks in the Solar industry.
While both TSLA and BEEM are good long-term investments considering the factors discussed here, TSLA appears to be a better choice because it is a cheaper investment option to benefit from the EV boom. Moreover, TSLA’s superior financials and higher profitability should help it perform better than BEEM.
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TSLA shares were trading at $856.40 per share on Thursday morning, up $1.99 (+0.23%). Year-to-date, TSLA has gained 21.36%, versus a 1.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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