The electric car juggernaut Tesla, Inc. (TSLA) completed 2020 by delivering robust performance in the face of unforeseen global challenges by rapidly expanding its manufacturing capabilities. However, the stock has lost 7.5% over the past month. It has been struggling to keep pace with its strong competitors who are making deeper forays into the electric vehicle (EV) space, while trading at relatively lower valuations…
TSLA missed earnings estimates in the last reported quarter. Its adjusted earnings per share for the fourth quarter 2020 came in at $0.80, falling short of the consensus estimate by 22.3%. This, along with its stretched valuation, could result in further price decline for the stock in the near term.
In contrast, General Motors Company (GM – Get Rating), Tata Motors Limited (TTM – Get Rating), and Mazda Motor Corporation (MZDAY – Get Rating) look poised to outperform with their strong long-term earnings prospects and reasonable valuations.
General Motors Company (GM – Get Rating)
Headquartered in Detroit, Michigan, GM designs and sells trucks, crossovers, and automobile parts worldwide. It operates through the following segments: GM North America, GM International, Cruise, and GM Financial. In addition, it provides connected services that comprise mobile applications for electric vehicle owners to locate charging stations.
This month, GM collaborated with OneH2, and Navistar, Inc. to introduce a hydrogen truck ecosystem with hydrogen fuel cell technology. Because hydrogen is the future of zero-emission renewable energy in the heavy truck market, this partnership could help GM advance in a zero-emission long-haul transportation system and stand out in the market.
In January, GM and Cruise teamed with Microsoft (MSFT) to accelerate the commercialization of self-driving vehicles. This should help GM realize even more benefits from cloud computing as it launches 30 new electric vehicles globally by 2025 and creates new businesses and services to drive growth.
GM’s net sales and revenue under GMNA segment has increased 32.9% year-over-year to $30.17 billion in the fourth quarter, ended December 31, 2020. Its net automotive cash provided by operating activities rose 581.8% from its year-ago value to $5.24 billion. The company reported net income of $2.85 billion, compared to a net loss of $194 million in the prior-year quarter.
A consensus EPS estimate of $0.97 for the current quarter ending March 31, 2021 represents a 56.5% increase year-over-year. Also, GM has an impressive earnings surprise history; the company beat the Street’s EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $33.5 billion for the current quarter represents a 2.4% increase from the same period last year. The stock has gained 50.5% over the past year.
In terms of its forward non-GAAP p/e ratio, GM is currently trading at 10.09x, which is significantly lower than TSLA’s 186.41x.
GM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
GM has a B grade for Growth and Value. Of the 52 stocks in the C-rated Auto & Vehicle Manufacturers industry, GM is ranked #18.
In total, we rate GM on eight different levels. Beyond what we stated above we also have given GM grades for Stability, Sentiment, Momentum, and Quality. Get all the GM ratings here.
Note that GM is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Tata Motors Limited (TTM – Get Rating)
TTM is a designer, manufacturer, and seller of passenger cars, sports utility vehicles, small commercial vehicles and pickup trucks, buses, and heavy commercial vehicles. It operates in India, China, the United States, Europe, and internationally and sells its products under the brand names – Tata, Daewoo, Fiat, Jaguar, and Land Rover.
Jaguar Land Rover, the luxury automotive brand owned by TTM, recently introduced its “Reimagine” strategy, which will culminate in the brand becoming an all-electric offering by 2025, with the first all-electric Land Rover model set to debut in…
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