Tesla Motors ($TSLA) fourth quarter financial results will be released after the bell tomorrow (2/10). Tesla’s ($TSLA) stock price fell to a 2-year low during today’s trading session on concerns that cheap gasoline is slowing down demand for electric cars. Tesla aspires to deliver 500 000 cars by 2020 and with gasoline prices below 2 dollars a gallon in the U.S, this could be a challenge. Investors and analysts have also communicated concerns in regards to whether the company will be able to ramp up the production of the Model X SUV as scheduled. Wall Street is anticipating Tesla ($TSLA) to announce earnings of 9 cents per share and revenue of $ 1.79 billion for the quarter. In addition to earnings, close attention will be paid to Tesla’s ($TSLA) 2016 guidance. Like we saw with LinkedIn ($LNKD), the reduced guidance on future revenue sent the stock tumbling.
The SprinkleBit Analyzer is a great tool you get access to through SprinkleBit’s premium subscription. As Tesla ($TSLA) was founded in 2003, while other U.S auto manufactures have been around for decades, it would not be accurate to use companies such as GM ($GM), Ford ($F) or Fiat Chrysler ($FCAU) for this comparison analysis. GM ($GM), Ford ($F), and Fiat Chrysler ($FCAU) are considered value companies, while Tesla ($TSLA) is a growth company. For this reason we chose to compare Tesla’s ($TSLA) fundamentals to other companies that are experiencing similar revenue growth and gross margins. We found the companies by using another tool available to SprinkleBit’s Premium Subscribers, The Stock Screener.
Based on gross margins between 35% – 80%, and revenue growth between 130% – 180% the Stock Screener gave us the following companies, Colfax Corporation ($CFX), Hiltop Holdings ($HTH), Colony Financial ($CLNY), and Achillion Pharmaceuticals ($HK). By running the fundamental measures in comparison to these companies we received s an implied share price of $ 83.63. With the current trading price of $ 150 (2/9 @ 11:20 am) Tesla ($TSLA) is overvalued with 44.62%
We have also taken a look at the technicals on Tesla ($TSLA) daily stock chart to see where a potential miss or beat could move the price to. With an entry price of $151 and a reported loss on earnings, the stock has the potential to fall to $120, for a 20.5% loss. With an entry price of $151 and a reported beat on earnings, the stock has the potential to rise to $180, for a 19.1% gain. The risk/reward ratio for this trade is 0.93.
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