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Tesla (TSLA) Gains But Lags Market: What You Should Know

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Zacks Equity Research
·3 min read
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Tesla (TSLA) closed the most recent trading day at $850.45, moving +0.7% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.39%. Elsewhere, the Dow gained 0.83%, while the tech-heavy Nasdaq added 1.97%.

Coming into today, shares of the electric car maker had gained 31.89% in the past month. In that same time, the Auto-Tires-Trucks sector gained 17.2%, while the S&P 500 gained 2.58%.

Investors will be hoping for strength from TSLA as it approaches its next earnings release, which is expected to be January 27, 2021. On that day, TSLA is projected to report earnings of $0.85 per share, which would represent year-over-year growth of 97.67%. Meanwhile, our latest consensus estimate is calling for revenue of $10 billion, up 35.4% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for TSLA. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 7.31% higher within the past month. TSLA is holding a Zacks Rank of #1 (Strong Buy) right now.

Valuation is also important, so investors should note that TSLA has a Forward P/E ratio of 221.19 right now. This represents a premium compared to its industry's average Forward P/E of 15.86.

Meanwhile, TSLA's PEG ratio is currently 5.9. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TSLA's industry had an average PEG ratio of 2.41 as of yesterday's close.

The Automotive - Domestic industry is part of the Auto-Tires-Trucks sector. This industry currently has a Zacks Industry Rank of 29, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow TSLA in the coming trading sessions, be sure to utilize Zacks.com.


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