There are many ways to measure Tesla Motors Inc (NASDAQ:TSLA)’ remarkable progress in the three years since the electric car maker launched its initial public offering. There’s the first-ever profitable quarter this spring, the nearly perfect 99 out of 100 score in Consumer Reports’ review of the Model S sedan, and the stock price which is up by more than 500% since June 2010.
The Model S competes with well-established cars such as the BMW 5/7 Series and the Mercedes E/S class, while also competing with hybrid Toyota Motor Corporation (ADR) (NYSE:TM) Prius line and Ford Motor Company (NYSE:F)’s Focus Electric.
After the first quarter’s positive sales and profits, and pay off of $465 million government loan 9 years early, the company’s niche positioning and complete revamp of car design is expected to reap further good news for investors on July 22, when second quarter earnings are reported.
Toyota Motor Corporation (ADR) (NYSE:TM) Prius has been the most successful gas-electric hybrid to date. In July, it was reported to have crossed 3 million unit worldwide sales. In the U.S., the company expects to see its sales rise by approximately 6%. In the company’s latest annual report, it shows a positive free cash flow after clocking in a negative value in the previous year.
Toyota Motor Corporation (ADR) (NYSE:TM) is finally picking up its pace and getting closer to its previous level, as its margins and revenues improve. While it would be over-optimistic to expect Toyota to hold the same market share as it did before, the company’s impressive line-up and introduction of new models is allowing it to show phenomenal growth.
The latest big-manufacturer entrant into the electric car industry is the new Ford Motor Company (NYSE:F) Focus Electric which is not doing well at all. Problem being its high price, and while Ford Motor Company (NYSE:F) has cut its price by $4,000, sales continue to be disappointing as it has only sold 1,400 units since its 2011 launch.
Besides the electric vehicles, Ford is continuing to put in a strong shift in the North American market and cut down its losses in Europe until the continent recovers from financial crisis. What’s more worrying though, is its rival General Motors’ heavy involvement and rocketing sales in China. Keeping in mind how the company’s primary rival is the American counterpart, the F-150 sales in North America will keep Ford afloat for only so long.
Future course
The financial performance of the three companies is summarized in the table below. Tesla Motors Inc (NASDAQ:TSLA)’s lack of values stem from the fact that it made profit for the first time in the preceding quarter, and most of the metrics used are based on time-series data.
| Indicator | Tesla | Toyota | Ford |
|---|---|---|---|
| Price/Earnings TTM | – | 21.5 | 11.6 |
| Operating Margin % TTM | -32.9 | 6.0 | 4.5 |
| Net Income Growth (3 Yr Avg.) | – | 66.2 | 27.8 |
| Revenue Growth (3 Yr Avg.) | 54.6 | 5.2 | 4.9 |
| Dividend Yield, % | – | 0.52 | 1.77 |
| Return on Equity | -183.0 | 8.5 | 34.4 |
| Current Price | $118.50 | $130.00 | $16.89 |
Data from Morningstar and Financial Visualizations on June 20th, 2013
For the second half of 2013, Tesla Motors Inc (NASDAQ:TSLA) looks to have a jump on its rivals. So much so that General Motors has assembled a special team to evaluate the Tesla Model S. While its 90-second battery replacement pack is quite far from being implemented on a large scale, the company’s policy of having proprietary rights over the recharging utilities is giving it a comparative advantage of rivals such as Toyota and Ford.
While Toyota does not have an all-electric vehicle, Ford’s Focus Electric does not enjoy the same luxury or recharging capabilities as offered by Tesla Motors Inc (NASDAQ:TSLA). What does this mean for Tesla? Well, first and foremost, Tesla is becoming a status symbol that makes heads turn even at a place like California, which is earning the Model S a lot of fame, acclaim and, most importantly, sales. I expect Tesla’s revenues and cash flows to swell considerably for the remainder of 2013.
On the other hand, Toyota’s Prius is the most famous hybrid car available in the U.S. market, but the brand is recognized by Corolla – not Prius. Furthermore, Ford’s fledgling sales of the Focus Electric increasingly place it in the ‘Dog’ corner of the Boston Matrix.
While the P/E ratio puts Toyota fairly in the overvalued segment, Ford is undervalued, but has low growth prospects for the future as it loses market share in Europe and is outpaced by General Motors in China. Increasing competition in North America is bound to saturate the sales and thus cannot be used as a long-term justification for prospective growth.
Final word
To be honest, based on Elon Musk’s innovative past and the market changing nature of Model S, Tesla Motors Inc (NASDAQ:TSLA) has no challengers when it comes to where I’d want to land my hard-earned money. Buy now, before the earnings report is released – this is the perfect time for Tesla’s revolution.
The article Perfect Timing For Tesla’s Revolution originally appeared on Fool.com and is written by Awais Malik.
Awais Malik has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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