In this piece, I evaluated two automaker stocks, Tesla (NASDAQ:TSLA) and Ford Motor Company (NYSE:F), using TipRanks’ comparison tool below to see which is better. A closer look suggests a neutral view for Tesla and a bullish view for Ford.
Although both companies are primarily automakers, Tesla is known for all-electric vehicles, solar energy systems, and energy storage. On the other hand, Ford is a legacy automaker with an over-100-year history of designing and manufacturing conventional vehicles with internal combustion engines (ICEs). Like most legacy automakers, Ford has begun moving into EVs much more recently.
Shares of Tesla have plunged 21.9% year-to-date but are up 19% over the last 12 months after its recent surge. Meanwhile, Ford stock has popped 6.6% year-to-date and 10.6% over the last year.
This dramatic difference in year-to-date share-price performance can be attributed to the growing news narrative about disappointing EV sales. According to Cox Automotive, EV sales in the U.S. plunged 15.2% between the fourth and first quarters, marking the first sequential decline since the second quarter of 2020.
As a result, Tesla stock has taken a hit, especially since its sales have declined. On the other hand, Ford is making clear headway in EV sales, with Cox reporting an impressive 86.1% year-over-year increase in EV sales for the legacy automaker in the first quarter.
Given that Tesla produces all-electric vehicles while Ford is a legacy automaker with a long history of ICE-powered vehicles, a head-to-head comparison of their price-to-earnings (P/E) ratios is less helpful because EV makers have long traded at much higher valuations than legacy automakers. However, we can examine other factors to determine which stock is better, especially given that both have recently reported their first-quarter earnings results.
Tesla (NASDAQ:TSLA)
At a P/E of 50x, Tesla’s valuation has been marching more or less steadily downward. Unfortunately, the higher forward P/E of 61.2x suggests that analysts expect continued declines in the automaker’s earnings. Thus, between the concerns about weak deliveries, growing competition, continuing price cuts, and the recent layoffs, a neutral view seems appropriate, at least for now.
Tesla stock surged last Wednesday despite a disappointing first-quarter earnings report. The automaker reported adjusted earnings of 45 cents per share on $21.3 billion in sales versus the consensus numbers of 49 cents per share on $22.256 billion in revenue. Net income came in at $1.13 billion or 34 cents per share, compared to $2.51 billion or 73 cents per share in the year-ago quarter.
Notably, Tesla’s first-quarter sales plunged 9% year-over-year, the largest drop since 2012, while its net income plummeted 55% year-over-year. The declines weren’t a surprise, given that the company had already reported an 8.5% year-over-year drop in vehicle deliveries for the first quarter.
On Wednesday, investors were apparently more interested in CEO Elon Musk’s comments suggesting production of new, more affordable EV models could start sooner than expected. He said they could start producing the new models in “early 2025, if not late this year.” Previous discussions suggested production would begin in the second half of 2025.
It’s particularly interesting that Tesla shares soared more than 10% based purely on that news. In its shareholder deck, the automaker repeated its pessimistic guidance for this year, warning that the “volume growth rate may be notably lower than the growth rate achieved in 2023.” However, Musk also said on the earnings call that he thinks “Q2 will be a lot better.”
Due to the many concerns for Tesla currently, I’d like to see the stock fall even further before becoming more constructive, especially considering Musk’s years-long obsession with robotaxis that have yet to make an appearance.
What Is the Price Target for TSLA Stock?
Tesla has a Hold consensus rating based on eight Buys, 19 Holds, and eight Sell ratings assigned over the last three months. At $177.30, the average Tesla stock price target implies downside potential of 8.8%.
Ford Motor Company (NYSE:F)
At a P/E of 13.5x, Ford is trading toward the middle of its typical range between the mid-single digits and the low-to-mid-20s over the last five years. While the market didn’t seem overly thrilled with the company’s latest earnings report, a closer look reveals some hidden gems that call for a bullish view, especially at the current forward P/E of about 6.3x.
Ford surprised to the upside on earnings but missed slightly on sales in its latest earnings report released on Wednesday. The automaker reported adjusted earnings of 49 cents per share on $39.9 billion in Automotive revenue versus the consensus numbers of 43 cents per share and $40.1 billion in automotive sales. Including its Credit arm, Ford’s total revenue rose 3% year-over-year to $42.8 billion.
Net income amounted to $1.33 billion or 33 cents per share versus the year-ago result of $1.76 billion or 44 cents per share. Ford’s adjusted EBIT (earnings before interest and taxes) fell 18% year-over-year to $2.76 billion or 49 cents per share.
Ford Blue, the automaker’s traditional business, reported a 66% plunge in adjusted earnings year-over-year to $905 million, although sales fell only 13%. On the other hand, the commercial business provided support during a time of consumer-related weakness, with Ford Pro earnings soaring 120% year-over-year to $3 billion.
However, Ford’s Model e EV recorded a $1.32 billion loss for the first quarter, in line with the market-wide weakness in EV sales, while the EV segment as a whole recorded an 84% plunge in sales for the first quarter due to pricing pressure. Nonetheless, it wasn’t all bad news from Ford’s EV division, as all of its electric models recorded double- or triple-digit sales growth.
In fact, the strength in Ford’s commercial division was actually driven by a 40% surge in EV adoption for Ford Pro, with Ford E-transit sales soaring 148% year-over-year in the first quarter. Additionally, management said they would delay EV production at one factory until 2026 and add more hybrid models. I believe these are both excellent moves in light of the current climate, which saw U.S. hybrid sales grow five times faster than EV sales in February.
What Is the Price Target for F Stock?
Ford Motor Company has a Hold consensus rating based on five Buys, six Holds, and two Sell ratings assigned over the last three months. At $14.31, the average Ford stock price target implies upside potential of 12.7%.
Conclusion: Neutral on TSLA, Bullish on F
While selling only EVs benefited Tesla during the good times for EVs, it has become a detriment at a time when EV demand is slowing and consumers are preferring hybrids. Meanwhile, Ford is benefiting from covering all ends of the spectrum, from conventional ICE-powered vehicles to EVs.
Thus, during this time of uncertainty, Ford is the clear winner of this pairing, at least for now. However, I would expect Tesla to come roaring back eventually, suggesting that a wait-and-see approach may be better for the EV maker.
