Electric vehicles and power train components related to vehicle manufacturing are the core business aspects of Tesla Motors (NASDAQ:TSLA) trading. Several other automobile manufacturers buy the power train components produced by Tesla motors and that is the leading cause of growth of the firm. Most of the supply chain is solely handled by the company itself and that has enabled them to control the pricing of the products and make swift changes as per the demand of the customers.
The core business of Ford Motor Company (NYSE:F) is the manufacturing of services and trucks. They also deal in the vehicle-related financing, insurance and leasing of their products with the help of their subsidiaries.
Toyota Motors (NYSE:TM) is a famous brand that deals in trucks, buses, passenger cars and the parts related to them. They don’t only sell the products but also provide facilities of leasing for those customers who can’t pay the price upfront.
Recent Trading Patterns
Tesla Motors saw a decent increase in its stock value that increased the price of the stock by $2.85. The overall increase in the stock shot the price at $147.82; increasing it by 2.02% over the course of the day. There are some fantastic projects in the pipeline for Tesla Motors that has enabled them to cash on the speculative demand of the stock and make big money from the recent investments.
On the other hand, Ford Motors Company hasn’t seen any significant change in its price. The general thought in the market about Ford Motors is that the firm is facing a decline in the demand of the stock. It is believes that the firm lacks innovation and is falling behind the competition that is being led by the Tesla Motors. The price of the stock is just $16.15 and hasn’t seen any major development in the recent times.
Toyota Motors has a diversified portfolio of products that has enabled them to survive a stern competition from Tesla Motors. A small correction in the market has seen a minimal decline in the stock price; lowering it by 1.30% to $126.54. However, the firm has the potential to grow in the long-run considering the strong financials that will be discussed below.
Some important ratios for the investors
Tesla Motors is facing some problems as far as their profitability is concerned. The firm is incurring losses especially witnessing a huge decline in the demand following the global financial crisis that took place in 2008. The operating losses are -16.38% that translates into the overall loss of -16.62% in the recent fiscal year. The return on assets sunk to -10.17% whilst the return on equity drowned to a massive figure of -63.61%.
Ford Company showed a decent performance in the recent times stating an operating profit margin of 4.55% and an overall profit margin of 4.26%. Return on Assets of 2.15% is not so convincing but considering the overall decline in the industry demand, it is expected that Ford Motors will revive the good old days of hefty profits in a span of next five years. Return on Equity was impressive stating 33.17% benefit for the shareholders.
Toyota Motors with a vast variety of products in the market registered an operating profit margin of 7.54% and a net profit margin of 5.41%. It shows that they have managed to secure a decent percentage of customers from the pool of total market. The return on assets was 3.20% and the shareholders yielded 11.11% return on their equity.
Which stock to buy?
Comparing the three firms based on the stats above, it can be said that the boom in the price of Tesla Motors is majorly due to their prospective projects but for short-term investors, it is better to put their money in Ford Company as its stock isn’t so expensive and at the same time reporting a hefty return on equity.
However, the safest mid-term stock is Toyota Motors without a doubt. They have a diversified product portfolio that enables them to mitigate risk and counter the small corrections of market at a fast pace. They have cemented their position in the market; with a 201.14 billion dollars investment, the firm isn’t going anywhere close to bankruptcy anytime soon.
Hina Amjad has no position in any stocks mentioned. The Motley Fool recommends Ford and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!