BYD Trades at 20 Times Earnings. Tesla Trades at 344. Here's Which One I'd Buy Today.
Tesla offers transformational upside, while BYD offers a cheaper entry point.
Overview
Tesla (NASDAQ: TSLA) and BYD (OTC: BYDDY) are two of the largest electric vehicle manufacturers in the world. But if you own them, you're paying dramatically different prices for each dollar of profit these companies generate. BYD currently trades at roughly 20 times trailing earnings. Tesla trades at around 344 times earnings. That's a massive difference, particularly when you look at what the two companies are actually selling.
In September, BYD sold 463,561 new-energy vehicles (vehicles powered by an alternative to fossil fuels), up about 17% from a year earlier. Overseas passenger vehicle and pickup sales reached nearly 180,000, representing an increase of more than 150%. Tesla, meanwhile, delivered 486,532 vehicles during the entire third quarter. That was better than Wall Street expected and was certainly a modest improvement from Q2. But deliveries were still down roughly 2% from a year earlier.
Details
So why does Tesla command such a higher valuation on an earnings basis? Because the market isn't really valuing Tesla as a car company anymore. Let's see which stock is the better deal right now.
Source
Originally published at www.fool.com.