In this article, I have evaluated prominent auto stocks, Tesla, Inc. (TSLA) and Japan-based Nissan Motor Co., Ltd. (NSANY), to predict the investing strategies for the week ahead. After thoroughly evaluating these stocks, I think NSANY is a superior choice to TSLA for the reasons discussed in this article.
The global automotive market is expected to keep growing in the coming years because of a number of factors, such as the rising demand for personal and commercial vehicles, the rise of new technologies like electric and self-driving cars, and the growing awareness of safety and environmental issues among consumers. The global automotive market is expected to grow at a CAGR of 4.5% until 2030.
Additionally, as concerns over climate change and air pollution intensify, consumers and industries are increasing turning to electric vehicles to reduce their carbon footprint for greener future. This growing global momentum is expected to propel the EV market into transformative phase with investments driving the expansion of EV adoption across the world.
The global electric vehicle market is expected to grow at a CAGR of 13.7% until 2023.
While TSLA declined 17.5% over the past month compared to NSANY’s 1.1% decline, TSLA also declined 27.2% over the past six months compared to NSANY’s 10.1% decline.
Therefore, here are the reasons why I think NSANY might perform better in the near term:
Recent Developments
On January 18, 2024, NSANY announced Caio Collet as its reserve and simulator driver for the 2023/24 ABB FIA Formula E World Championship.
On January 4, NSANY through its partnership with UAE-based software company Coral, announced that it would work with biotech company VAXA Technologies to offset its carbon emissions generated during Season 9 of the ABB FIA Formula E World Championship.
Recent Financial Results
TSLA’s total revenues for the fiscal third quarter that ended September 30, 2023 came in at $23.35 billion, while its adjusted gross profit declined 22.4% year-over-year to $4.18 billion. Its net income attributable to stockholders declined 43.7% year-over-year to $1.85 billion, while its net income per share of common stock attributable to common stockholders declined 44.8% year-over-year to $0.58.
On the contrary, for the fiscal six months that ended on September 30, 2023, NSANY’s net sales increased 30% year-over-year to ¥6.06 trillion ($40.91 billion), while its operating income grew 115% from the year-ago value to ¥336.74 billion ($2.27 billion). In addition, the company’s net income improved 308.8% from the prior-year period to ¥307.79 billion (2.08 billion).
Past And Expected Financial Performance
TSLA’s revenue has increased at a CAGR of 50.4% over the past three years. Its revenue is expected to increase 14.8% in the first quarter ending March 2024. However, its EPS is expected to decline 4.1% in the first quarter ending March 2024.
Conversely, Over the past three years, NSANY’s revenue grew at a 14.6% CAGR. Analysts expect NSANY’s revenue to increase by 291.2% this year and 7.7% in the third quarter ended December 2023. Its EPS is expected to increase 87.2% this year.
Valuation
TSLA’s forward P/S multiple of 6.90 is higher than NSANY’s 0.17. Additionally, TSLA’s forward EV/Sales multiple of 6.73x is higher than NSANY’s 0.65x.
Thus, NSANY is more affordable.
Profitability
TSLA's trailing-12-month EBIT margin of 11.18% is lower than NSANY’s 4.64%. In addition, TSLA’s trailing-12-month net income margin of 11.21% is higher than NSANY’s 3.78%.
POWR Ratings
TSLA has an overall rating of D, which equates to a Sell in our proprietary POWR Ratings system. Conversely, NSANY has an overall rating of B, translating to a Buy. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. TSLA's D grade for Growth is in sync with its poor performance in the recent quarter. On the other hand, NSANY's A grade for Growth is in sync with robust performance in the recent quarter for NSANY.
Moreover, TSLA has a D grade for Stability, which is justified by its 24-month beta of 1.88. On the other hand, NSANY has a B grade for Stability, which is in sync with its 24-month beta of 0.64.
Among the 39 stocks in the Auto & Vehicle Manufacturers industry, TSLA is ranked #39, while NSANY is ranked #17.
Beyond what we’ve stated above, we have also rated both stocks for Value, Momentum, Sentiment, and Quality. Get all TSLA ratings here. Click here to view NSANY ratings.
The Winner
With the advancements in technology and rising demand, the automotive industry is expected to see robust growth. Industry players such as TSLA and NSANY are well-positioned to benefit from these industry tailwinds.
However, NSANY's low beta values and low valuation multiples makes it the better buy.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Auto & Vehicle Manufacturers industry here.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
NSANY shares were trading at $7.92 per share on Monday afternoon, up $0.13 (+1.63%). Year-to-date, NSANY has gained 1.10%, versus a 1.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
The post TSLA vs. NSANY - Buy or Sell Investing Strategies for the Week Ahead appeared first on StockNews.com