NEW YORK (TheStreet) -- Tesla Motors (Nasdaq:TSLA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins and feeble growth in its earnings per share.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 79.3% when compared to the same quarter one year ago, falling from -$58.90 million to -$105.60 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 34.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -396.20% is significantly below that of the industry average.
- TESLA MOTORS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TESLA MOTORS INC reported poor results of -$2.52 versus -$1.33 in the prior year. This year, the market expects an improvement in earnings (-$2.47 versus -$2.52).
- TSLA, with its very weak revenue results, has greatly underperformed against the industry average of 8.4%. Since the same quarter one year prior, revenues plummeted by 54.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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