NEW YORK ( TheStreet) -- Tesla Motors (Nasdaq: TSLA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
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- TSLA's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 1762.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 241.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- TESLA MOTORS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC reported poor results of -$3.70 versus -$2.52 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$3.70).
- The gross profit margin for TESLA MOTORS INC is rather low; currently it is at 20.32%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 2.00% trails that of the industry average.
- The debt-to-equity ratio is very high at 2.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, TSLA has a quick ratio of 0.52, this demonstrates the lack of ability of the company to cover short-term liquidity needs.