Does TSLA or NIU Have a More Profitable Market Positions? The automotive industry is flourishing, driven by surging demand for new cars, the growing popularity of EVs, and rapid AI adoption. Amid this, let's determine whether auto stocks Tesla (TSLA)...

The automotive industry is flourishing, driven by surging demand for new cars, the growing popularity of EVs, and rapid AI adoption. Amid this, let's determine whether auto stocks Tesla (TSLA) and Niu Technologies (NIU) hold profitable market positions. Read more….

The U.S. new vehicle sales are growing rapidly in 2024, setting strong growth prospects for the automotive industry. Further, the adoption of emerging digital technologies like AI to streamline operations and improve overall vehicle performance is revolutionizing the industry.

Given the industry's bright prospects, it seems prudent to wait for a better entry point in Niu Technologies (NIU). However, struggling Tesla, Inc. (TSLA) is best avoided now.

With rapid innovation and technology, the global auto industry is expected to showcase robust growth. The new vehicle sales in the U.S. increased by 5.1% from January through March, owing to the customers' confidence despite high-interest rates. Nearly 3.8 million vehicles were sold in the first quarter of 2024, embarking on a solid year.

Moreover, sales in March represented an increase of 15.5% from February with 1,455,030 unit sales, of which passenger car sales were 293,894 units, resulting in a 20.2% market share.

According to a Spherical Insights report, the global automotive industry is expected to reach $6.86 trillion by 2033, expanding at a CAGR of 6.8%. The factors influencing the market growth include the prevalence of EVs, rising urbanization and infrastructure investment, and safety innovations.

Besides, introducing artificial intelligence (AI) into the automotive industry marks the dawn of a new era, enabling businesses to track operations, improve business plans, pioneer autonomous and semi-autonomous vehicles, and elevate digital outcomes. The global AI automotive market is projected to total $14.92 billion by 2030, growing at a CAGR of 22.7%.

In light of these favorable trends, let's look at the fundamentals of the two Auto & Vehicle Manufacturer stocks, beginning with number 2.

Stock #2: Tesla, Inc. (TSLA)

TSLA designs, develops, manufactures, leases, and sells electric vehicles and energy generation and storage systems worldwide. It operates through two segments: Automotive and Energy Generation and Storage. It also sells automotive regulatory credits and non-warranty after-sales vehicles, used vehicles, body parts, and vehicle insurance services.

During the first quarter of fiscal 2024, TSLA experienced numerous challenges due to the Red Sea conflict and the arson attack at Gigafactory Berlin. This led to a 12.4% decline in vehicle production to 433,371, compared to the previous quarter. Further, deliveries plunged 20.2% from the prior quarter to 386,810 vehicles during the first quarter.

Also, TSLA continues to face lower global EV sales challenges as many carmakers prioritize hybrids over EVs. The company also undertook a cost-cutting exercise to increase operational efficiency and remained committed to company-wide cost reduction, including reducing COGS per vehicle.

TSLA's trailing-12-month gross profit margin of 17.78% is 50.9% lower than the industry average of 36.23%. Likewise, the stock's trailing-12-month asset turnover ratio of 0.97x is 2.3% lower than the industry average of 0.99x.

In terms of forward non-GAAP P/E, TSLA is trading at 64.93x, 328.8% higher than the industry average of 15.14x. Also, the stock's forward Price/Sales multiple of 5.43 is 521.2% higher than the industry average of 0.87. Similarly, its forward EV/EBIT of 63.83x is considerably higher than the industry average of 13.51x.

During the first quarter that ended March 31, 2024, TSLA's total revenues decreased 8.7% year-over-year to $21.30 billion. Its gross profit declined 18.1% from the year-ago value to $3.70 billion. The company's adjusted EBITDA came in at $3.38 billion, a decline of 20.7% from the previous year's quarter.

Furthermore, the company's non-GAAP net income and EPS attributable to common stockholders came in at $1.54 billion and $0.45, down 47.6% and 47.1% from the prior year's quarter, respectively.

Analysts expect TSLA's revenue and EPS for the second quarter (ending June 2024) to decrease 2.1% and 33.6% year-over-year to $24.39 billion and $0.60, respectively. Further, the company has missed the consensus revenue and EPS estimates in three of the trailing four quarters, which is disappointing.

The stock has plunged 7.5% over the past month and 18.2% over the past six months to close the last trading session at $168.29.

TSLA's bleak outlook is reflected in its POWR Ratings. The stock has an overall rating of D, translating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has a D grade for Stability, Growth, and Sentiment. Within the Auto & Vehicle Manufacturer industry, TSLA is ranked #41 out of 51 stocks.

Click here to access additional ratings of TSLA for Value, Quality, and Momentum.

Stock #1: Niu Technologies (NIU)

Headquartered in Beijing, China, NIU designs, manufactures, and sells electric scooters internationally. It provides RQi, NQi, MQi, SQi, UQi, F, and Gova series smart electric scooters, motorcycles, mopeds, and bicycles, KQi series kick-scooters, BQi series e-bikes, and Niu Aero Sports Bicycles. It also offers accessories and spare parts under the NIU brand name.

According to the sales volume update provided, NIU sold a total of 129,139 units in the first quarter of 2024, indicating an increase of 37% year-over-year, of which its China market sales increased 35% from the year-ago value to 110,115 units and international market sales grew 48% year-over-year to 19,024 units.

This reflects NIU's commitment to industry leadership, and expects to regain its growth momentum in the year with new models and expanding sales channels.

NIU's trailing-12-month levered FCF margin of 6.66% is 20.2% higher than the 5.54% industry average. However, the stock's trailing-12-month gross profit margin and CAPEX/Sales of 21.52% and 2.98% are lower than the respective industry averages of 40.70% and 3.05%.

In terms of forward non-GAAP P/E, NIU is trading at 11.50x, 24.7% lower than the industry average of 15.27x. Likewise, the stock's forward EV/Sales multiple of 0.11 is 90.5% lower than the industry average of 1.19. However, its trailing 12-month Price/Cash Flow of 13.28x is 47.7% higher than the industry average of 8.99x.

For the fourth quarter that ended December 31, 2023, NIU reported revenues of $67.42 million, down 21.8% year-over-year. Its gross profit decreased 33.9% from the year-ago value to $12.81 million. Its net loss came in at $18.33 million, or $0.12 per ordinary share, respectively.

Further, the company's cash and cash equivalents stood at RMB 872.57 million ($122.90 million) as of December 31, 2023, compared to RMB 534.29 million ($73.70 million) as of December 31, 2022.

Analysts expect NIU's revenue for the fiscal year (ending December 2024) to grow 27.8% year-over-year to $476.62 million. The company is expected to report an EPS of $0.20 for the current year, compared to a year-ago loss per share of $0.49. However, the company failed to surpass the consensus EPS estimates in each of the trailing four quarters.

Over the past month, NIU's stock has gained 32.6% to close the last trading session at $2.26. However, the stock has declined 38.7% over the past year.

NIU's POWR Ratings reflect its neutral prospects. The stock has an overall grade of C, translating to a Neutral in our proprietary rating system.

NIU has a C grade for Quality. It is ranked #32 among 51 stocks within the Auto & Vehicle Manufacturers industry.

To see the other ratings of NIU for Sentiment, Value, Growth, Momentum, and Stability, click here.

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TSLA shares rose $21.68 (+12.88%) in premarket trading Monday. Year-to-date, TSLA has declined -23.62%, versus a 7.55% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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