There’s been no company, or stock, as hot as Tesla (TSLA) over the last year. The luxury automaker is an American success story, complete with a larger than life CEO in the form of Elon Musk. Tesla manufactures luxury highway capable electric vehicles. It entered production of the Tesla Roadster in 2008, the Model S in 2012 and will deliver the Model X this year.
The Future Looks Bright
Tesla is attempting to become the first new successful U.S. automaker in over 50 years. It is off to a hot start.
On Feb 19, Tesla reported fourth quarter results and blew by the Zacks Consensus Estimate by 250%. It sold a record 6,892 Model S vehicles in the quarter. Gross margin was 25%.
Tesla was optimistic about 2014, especially internationally. The Model S will start deliveries in China this spring. If all things go according to plan, it expects Europe and Asia combined sales to be twice that of North America by the end of 2014.
Full Year Estimates Soar
On Mar 28, federal safety regulators announced they were closing their investigation into two fires in the Model S in 2013, deciding that the design of the car was not flawed.
Tesla, to assuage consumer fears, said it would provide more protection to its lithium-ion batteries. No one was hurt in the fire incidents.
Analysts like what they see. Estimates have been moving sharply higher over the last 3 months. The 2014 Zacks Consensus has jumped to $1.31 from 49 cents per share in the last 90 days.
That is earnings growth of 670%.
Analysts are bullish on 2015 as well, and they see continued earnings growth of 173%.
Tesla doesn’t report monthly sales results as other domestic automakers do. Investors have to wait until May, when Tesla reports its first quarter results, to see how 2014 is shaping up.
Shares Retreat From the Highs
Tesla has been a high momentum stock over the last year. Tesla stock is still up 38% year to date despite a drubbing in the month of March as nervous investors sent them sinking 15%.
Even with the pullback, Tesla stock is no deal. Tesla stock trades with a forward P/E of 162.
But you don’t buy Tesla stock for the value. You buy it for that triple digit earnings growth.
Tesla is also the only domestic U.S. automaker that is a Zacks Rank #1 (Strong Buy).
If you’re a growth investor, then Tesla should be on your short list.
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