The electric vehicle industry (EV) boom last year, driven by rising concerns regarding climate change, multiple government subsidies, and federal plans to phase out fossil fuel powered vehicles, drove a record level of EV sales in 2020. The IEA reported a record 3 million new electric car registrations in 2020, up 41% from the previous year. This sales level came in at a time when the global automobile market contracted by 16% due to the pandemic-led recession.
However, a global semiconductor shortage has emerged as a major hindrance to the growth of the EV industry, worsened by several natural and man-made calamities. According to consulting firm AlixPartners, the global automotive industry is projected to lose $110 billion in revenue in 2021 due to the ongoing chip shortage. Indeed, due to the rising prices of processor chips, EV manufacturers are scaling down their operations as production costs rise significantly. Consequently, several EV companies’ revenue and earnings growth estimates should remain low for the coming quarters.
Tesla, Inc. (TSLA)
TSLA is the biggest manufacturer and seller of electric vehicles (EVs). The company operates in two segments: Automotive, and Energy Generation and Storage.
TSLA recently recalled several of its Model Y and Model 3 EVs due to flawed designs or finishing. On June 3, the company recalled 6,000 vehicles to tighten potentially loose bolts after the NHTSA reported that loose bolts could increase the risk of crash.
Also, CEO Elon Musk’s previous announcement that Tesla would launch self-driving cars by the end of this year may not be realized. Last month, TSLA sent a memo to the California Motor Vehicles Department stating that it might not be able to commercially deploy self-driving technology by the end of this year.
In terms of non-GAAP forward P/E, TSLA is currently trading at 130.66x, which is 653% higher than the 17.35x industry average. Its 11.69 forward Price/Sales multiple is 768.6% higher than the 1.35 industry average. The company’s forward Price/Cash Flow and EV/EBITDA ratios of 87.41 and 62.77, respectively, compare with the industry averages of 15.14 and 11.73.
TSLA’s total revenues have increased 74% year-over-year to $10.39 billion in its fiscal year 2021 first quarter. Its operating income grew 110% from the year-ago value to $594 million. The company’s non-GAAP EPS has increased 304% year-over-year to $0.93.
The Street expects TSLA’s revenues to rise 86.1% year-over-year to $11.23 billion in the current quarter (ending June 2021). A $0.96 consensus EPS estimate for the current quarter indicates a 118.2% improvement year-over-year. The company has an impressive earnings surprise history as well. It beat the consensus EPS estimates in each of the trailing four quarters.
TSLA has lost 11.1% over the past month, and 15.1% year-to-date.
TSLA’s POWR Ratings are consistent with this bleak outlook. The stock has an F grade of F for Value, and grade D for Stability in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree. Among the 57 stocks in the C-rated Auto & Vehicle Manufacturers industry, TSLA is ranked #38.
To see additional POWR Ratings for Growth, Momentum, Sentiment and Quality, click here.
Workhorse Group Inc. (WKHS)
WKHS designs and manufactures high performance electric vehicles and aircraft. The company provides C-series electric delivery trucks and package delivery aircraft, and HorseFly.
Several law firms have filed lawsuits against WKHS alleging false and misleading statements made by the company to attract investors. Schall Law Firm has filed an investors action lawsuit against the company for violations of the Securities Exchange Act of 1934 and Rule 10b-5 of the SEC. Bronstein, Gewirtz & Grossman, LLC also has a similar lawsuit in place.
WKHS’ 19.09 forward EV/Sales ratio is 1,121% higher than the 1.56 industry average. Its 22.07 forward Price/Sales multiple is 1,539.8% higher than 1.35 the industry average. The company’s 7.81 forward Price/Book ratio compares with the 3.72 industry average.
WKHS’s gross loss increased 243.4% year-over-year to $5.70 million in the first quarter, ended March 31. Its loss from continuing operations grew 1,750.8% from its year-ago value to $153.06 million. WKHS’ net loss came in at $120.51 million, indicating a 2631.7% rise year-over-year.
WKHS has lost 40.9% over the past six months. The stock has lost 34% year-to-date.
Analysts expect WKHS’ EPS to remain negative until at least 2022. The company’s EPS is expected to decline 341.4% year-over-year in the current year. Also, the company missed the Street’s EPS estimates in three of the trailing four quarters.
It’s no surprise that WKHS has an overall F rating, which equates to Strong Sell in our proprietary POWR Ratings system.
The stock has an F grade for Value, Stability, Quality and Sentiment. Among the 57 stocks in the Auto & Vehicle Manufacturers industry, WKHS is ranked #56.
To see additional POWR Ratings for other components, click here.
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TSLA shares were trading at $606.92 per share on Monday afternoon, up $7.87 (+1.31%). Year-to-date, TSLA has declined -13.99%, versus a 13.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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