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Is Ford Motor Stock A Better Investment Than Tesla Motors Stock

  • In my view, at this moment Ford stock is a better investment than Tesla stock.
  • Considering its compelling valuation metrics, Ford stock is significantly undervalued.
  • While I do believe that TSLA's stock still has room to grow, investment in this fast-growing company is riskier.
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People interested in investing in automakers' stock might find themselves in a dilemma, should they choose a deep value stock like Ford (NYSE:F), or a high growth auto stock like Tesla (NSDQ:TSLA)? This doubt is a specific case in the much broader dilemma os which is a better stock picking strategy, value or growth? Let us first compare the two stocks on value and growth parameters.

Also Read: Why Tesla Motors Inc Stock Is A Risky Bet Right Now

Value Parameters

Ford stock is significantly undervalued. Ford's trailing P/E is very low at 5.53, and its forward P/E is also very low at 6.70. The price to free cash flow ratio is extremely low at 4.84, and the PEG ratio is very low at 0.62. In contrast, Tesla has a negative trailing P/E, and its forward P/E is very high at about 130. Moreover, its price to sales ratio is very high at 7.20, and its price to book value is also very high at 12.37.

Growth Parameters

Tesla has recorded substantial sales growth in the last few years. The company's average annual sales growth over the past five years was extremely high at 103%, compared to Ford's average annual sales growth of 3% over the same period. Although Tesla's EPS growth was negative in the last five years, its average annual estimated EPS growth for the next five years is very high at 35%. In comparison, Ford's estimated EPS growth for the next five years is about 9%.

Value versus Growth

Concerning the dilemma, which is a better stock picking...


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