Given its steady growth, electric vehicle (EV) giant Tesla, Inc. (TSLA) has secured a position in many investors’ portfolios. However, the stock has plunged 14.9% year-to-date to close its last trading session at $299.68. In addition, the stock is currently trading at a premium valuation.
TSLA’s forward Price/Sales multiple of 11.02x is 1113.8% higher than the industry average of 0.91x. Also, in terms of its forward Price/Book, the stock is trading at 22.16x, 792.5% higher than the industry average of 2.48x.
On the other hand, headquartered in Wolfsburg, Germany, automotive giant Volkswagen AG’s (VWAGY) shares jumped nearly 3% last week after it reaffirmed plans to pursue a sizable initial public offering of shares in the Porsche AG sportscar company.
In a statement issued, VWAGY stated that its supervisory board intended to list the shares on the Frankfurt Stock Exchange either at the end of this month or at the start of October. Just 12.5% of Porsche shares will be made available to private investors as part of VWAGY’s public listing.
Analyst estimates suggest that the offering could value Porsche at between 60 billion and 85 billion euros, or between $59.8 and $84.6 billion, and inject new funds into VWAGY’s coffers, which executives claim will help the company finance its switch to electric and self-driving cars.
Moreover, with governments worldwide focusing on emission reduction initiatives and green energy infrastructure development, the EV market has grown significantly in recent years.
We think VWAGY could be a better investment than TSLA at the moment, given its ability to better capitalize on the industry tailwinds and survive the challenges.
Here’s what could shape VWAGY’s performance in the near term:
For the six months ended June 30, 2022, VWAGY’s sales revenue increased 2% year-over-year to €132.29 billion ($132.91 billion). Its operating income increased 12.9% year-over-year to €12.83 billion ($12.88 billion). The company’s earnings grew 27% from the year-ago value to €10.29 billion ($10.35 billion), while its EPS grew 27.1% from the prior-year quarter to €20.51.
Impressive Growth Prospects
Street expects VWAGY’s revenues to rise 7.8% year-over-year to…
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