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Tesla’s Margins, Free Cash Flow Swell in Third Quarter

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Image: Tesla has returned to a free cash flow rich entity. By Brian Nelson, CFA Tesla (TSLA) reported solid third quarter earnings on October 23. Total revenues increased 8%, while gross profit increased 20% in the quarter, as gross margins expanded nearly 200 basis points. Income from operations was up 54% thanks to more than a 320 basis-point improvement in its operating margin. Adjusted EBITDA advanced 24% in the quarter on a year-over-year basis thanks to a 240 basis-point improvement in its EBITDA margin. Non-GAAP net income increased 8% year-over-year, while non-GAAP diluted earnings per share increased 9% year-over-year. Tesla’s total production was 469,796 in the quarter, up 9%, while total deliveries increased 6%, both on a year-over-year basis. Management … Read more

Tesla Is A Net-Cash-Rich, Free-Cash-Flow Generating, Secular-Growth Powerhouse

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Image: Tesla is generating billions and billions of dollars in free cash flow. By Brian Nelson, CFA The cash-based sources of intrinsic value (and the trajectory of growth in them) are the most important considerations when it comes to assessing the attractiveness of an equity. Two of the most important cash-based sources of intrinsic value are net cash on the balance sheet and future expected free cash flows, and in these two areas, Tesla (TSLA) excels. Though we won’t be adding Tesla to any of the newsletter portfolios anytime soon, we like it within a diversified basket of large-cap growth equities, of which the Best Ideas Newsletter in some ways approximates. When Tesla reported its second-quarter 2023 results July 19, … Read more

Tesla Registers Record Total Deliveries in Second Quarter 2023

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Source: Tesla By Brian Nelson, CFA At the start of 2023, Tesla’s (TSLA) price-to-fair value ratio stood at just 0.39, revealing a stock that was severely undervalued and one of the most undervalued stocks in our coverage universe. Shares of Tesla have rocketed higher more than 150% so far in 2023, and while we highlighted it as one of our favorite stocks to start this year, it never made it into the newsletter portfolios. We’re not too worried about that though given how well the newsletter portfolios were positioned with respect to exposure to large cap growth, which, itself, is up more than 35% so far in 2023. On July 2, Tesla noted that it delivered a total of 466,140 … Read more