Tesla Laps the Stock Market: Here's Why

In the latest trading session, Tesla TSLA closed at $254.27, marking a +1.71% move from the previous day. The stock's performance was ahead of the S&P 500's daily gain of 0.25%. Meanwhile, the Dow experienced a rise of 0.2%, and the technology-dominated Nasdaq saw an increase of 0.56%.

The electric car maker's shares have seen an increase of 17.25% over the last month, surpassing the Auto-Tires-Trucks sector's gain of 6% and the S&P 500's gain of 1.65%.

Investors will be eagerly watching for the performance of Tesla in its upcoming earnings disclosure. The company is expected to report EPS of $0.58, down 12.12% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $25.73 billion, up 10.18% from the prior-year quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $2.27 per share and a revenue of $98.9 billion, indicating changes of -27.24% and +2.19%, respectively, from the former year.

Investors might also notice recent changes to analyst estimates for Tesla. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Tesla presently features a Zacks Rank of #3 (Hold).

In terms of valuation, Tesla is currently trading at a Forward P/E ratio of 110.13. This valuation marks a premium compared to its industry's average Forward P/E of 14.04.

Also, we should mention that TSLA has a PEG ratio of 5.24. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. By the end of yesterday's trading, the Automotive - Domestic industry had an average PEG ratio of 1.47.

The Automotive - Domestic industry is part of the Auto-Tires-Trucks sector. This group has a Zacks Industry Rank of 168, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To read this article on Zacks.com click here.