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Analysts Debate: Is Tesla Motors Inc (TSLA) a Top Stock?

The Motley Fool has been making successful stock picks for many years, but we don’t always agree on what a great stock looks like. That’s what makes us “motley,” and it’s one of our core values. We can disagree respectfully, as we often do. Investors do better when they share their knowledge.

In that spirit, we three Fools have banded together to find the market’s best and worst stocks, which we’ll rate on The Motley Fool’s CAPS system as outperformers or underperformers. We’ll be accountable for every pick based on the sum of our knowledge and the balance of our decisions. Today, we’ll be discussing Tesla Motors Inc. (NASDAQ:TSLA), the leading electric vehicle maker.

Tesla Motors by the numbers

Here’s a quick snapshot of the company’s most important numbers:

Statistic Result (TTM or Most Recent Available)
Market Cap $4.5 billion
Forward P/E 30.1
Revenue $413.3 million
Gross margin 7.3%
Net income ($396.2 million)
Cash $201.9 million
Long-term debt $452.3 million
Vehicles Model S: 20,000 annual production rate, 15,000 reservations

Model X: Scheduled for delivery in early 2014

Key competitors Ford (NYSE:F)

General Motors (NYSE:GM)

Honda (NYSE:HMC)



Sources: Yahoo! Finance and company earnings release.

Travis’ take
Historically, auto companies have been a terrible investment. General Motors went bankrupt a few years ago, so did Chrysler, and even Ford hasn’t outperformed the S&P 500 long term.

F Total Return Price Chart

Source: F Total Return Price data by YCharts.

When you’re in a capital-intensive business with union workers it’s hard to alter your cost structure when the economy falters or consumer tendencies change. So, I come into any auto debate with a skeptical eye.

What Tesla Motors Inc. (NASDAQ:TSLA) brings vs. its larger competitors is a whole new look at the auto world. The company is building nothing but electric vehicles, it doesn’t have legacy costs to worry about, and it’s building its own dealer network. It’s also making no qualms about going after the high-end consumer. Instead of trying to build an electric vehicle for the masses, like GM, Honda, and Nissan did, it went after affluent consumers who wanted an electric vehicle with all the perks of a BMW. This year’s Motor Trend Car of the Year award validated all of those efforts.