Why Tesla (TSLA) Underperformed the Market

Tesla (TSLA - Free Report) recently closed at $436.17, showing a decline of -0.9% from the previous trading day. This decrease is notable as it outpaced the broader market, where the S&P 500 experienced a minor loss of 0.09%. In contrast, the Dow Jones Industrial Average recorded a slight gain of 0.04%, while the technology-heavy Nasdaq saw a drop of 0.1%.

Over the past month, Tesla's stock has surged by 28.68%, significantly outperforming both the Auto-Tires-Trucks sector, which gained 16.11%, and the S&P 500, which faced a loss of 0.29%. This momentum demonstrates Tesla's strength within the electric vehicle market.

Investors and analysts are now looking forward to Tesla's upcoming earnings report. Market expectations are high, with earnings per share (EPS) projected at $0.77, representing an 8.45% increase compared to the same quarter last year. Furthermore, revenue is expected to reach $27.95 billion, marking an 11.06% growth from the previous year's quarter.

For the full year, the Zacks Consensus Estimates forecast earnings of $2.47 per share and a revenue figure of $100.02 billion, indicating a decline of -20.83% in earnings and a modest growth of +3.36% in revenue when compared to the previous year.

Recent updates in analyst estimates for Tesla are also worth noting. These revisions reflect changing business trends. In particular, positive revisions signal a favorable outlook for the company's business and profitability moving forward.

Research has demonstrated a direct correlation between these estimate adjustments and imminent stock performance. To capitalize on this information, a rating system known as the Zacks Rank has been established, which takes these changes into account to provide actionable stock ratings.

The Zacks Rank ranges from #1 (Strong Buy) to #5 (Strong Sell). Historically, stocks ranked #1 have achieved an average annual return of +25% since 1988. Interestingly, there have been no changes to the Zacks Consensus EPS estimate for Tesla over the past 30 days, and Tesla currently holds a favorable Zacks Rank of #1 (Strong Buy).

In terms of valuation, Tesla's stock is trading at a Forward P/E ratio of 178.35, which is significantly higher than the industry average Forward P/E of 12.27. Additionally, Tesla's PEG ratio stands at 8.81, a metric that incorporates expected earnings growth. In comparison, the average PEG ratio for the Automotive - Domestic industry is only 1.74.

The Automotive - Domestic industry falls under the broader Auto-Tires-Trucks sector. Currently, this industry has a Zacks Industry Rank of 129, placing it in the bottom 49% among all 250+ industries, suggesting sluggish performance overall.

The Zacks Industry Rank evaluates industry groups by calculating the average Zacks Rank of the individual stocks within those groups. Historical data indicates that the top half of rated industries tend to outperform the bottom half by a ratio of 2 to 1.

To stay updated on Tesla and other stocks, be sure to check the latest available metrics and forecasts in the upcoming trading sessions.

Tesla, Stock, Earnings