The electric vehicle (EV) industry is evolving with significant technological advancements driven by hefty investments and strong federal support. The EV market is expected to record a robust growth rate of 23.5% from 2019-2028. Additionally, according to AAA’s consumer survey in July, one-quarter of Americans would likely buy an electric vehicle for their next purchase to save on rising fuel costs.
The EV giant Tesla, Inc. (TSLA) has been investors’ favorite in the EV industry, considering its solid growth. However, the stock has slumped 23.3% year-to-date and 10.1% over the past month. Tesla stock still seems pricey in terms of valuation. Its forward Price/Sales multiple of 9.95 is 1,054.2% higher than the industry average of 0.86. Also, in terms of its forward EV/Sales, the stock is trading at 9.82x, 800.3% higher than the industry average of 1.09x.
On the other hand, TSLA’s gross profit margin of 27.10% is 25.7% lower than the industry average of 36.49%. Additionally, TSLA is currently jousting with its Twitter (TWTR) deal.
Given this backdrop, we think other popular names in the EV industry, Volkswagen AG (VWAGY) and Ford Motor Company (F), could be better buys than TSLA now.
Volkswagen AG (VWAGY)
Headquartered in Wolfsburg, Germany, VWAGY manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific region. The company operates through four segments- Commercial Vehicles; Power Engineering; Financial Services; and Passenger Cars and Light Commercial Vehicles.
VWAGY’s sales revenue came in at €69.54 billion ($69.43 billion) for the second quarter of 2022, up 3.3% year-over-year. Its cash flow from investing activities came in at €7 billion ($6.99 billion), up 48.6% year-over-year.
Street expects VWAGY’s revenue to increase 4.5% year-over-year to $69.51 billion in the fiscal quarter ending September 2022.
VWAGY’s shares have slumped 7.3% over the past month to close the last trading session at $18.25.
VWAGY’s strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
VWAGY also has an A grade for Value and Sentiment and a B for Quality and Stability. It is ranked #2 of 65 stocks in the Auto & Vehicle Manufacturers industry.
Beyond what is stated above, we’ve also rated VWAGY for Momentum and Growth. Get all VWAGY ratings here.
Ford Motor Company (F)
F designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. It operates through three segments- Automotive; Mobility; and Ford Credit.
In July, F launched America’s first electric pickup truck- the 2023 Ford F-150® Lightning™ Pro Special Service Vehicle. Purpose-built for the police department, this modern, always-on work-ready truck helps improve productivity, lower costs and accelerate customers’ sustainability goals with its game-changing technology. This development should be strategically beneficial for the company.
F’s total revenues increased 50.2% year-over-year to $40.19 billion in the fiscal second quarter of 2022. Its net income improved 15.4% year-over-year to $638 million, while its EPS increased 14.3% from its year-ago value to $0.16 in the same period.
Analysts expect F’s revenue for the fiscal quarter ending September 2022 to come in at $37.57 billion, indicating a 13.1% increase year-over-year. The consensus EPS estimate of $0.52 represents a 1.3% year-over-year increase.
The stock has gained 16.5% over the past year to close the last trading session at $15.01.
According to the POWR Ratings, F has a B grade in Growth and Value. In the same industry, the stock is ranked #23.
In addition to the POWR Rating grades I’ve just highlighted, you can see the F’s ratings for Momentum, Sentiment, Stability, and Quality here.
VWAGY shares were trading at $19.20 per share on Tuesday afternoon, up $0.95 (+5.21%). Year-to-date, VWAGY has declined -32.49%, versus a -17.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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