TSLA

We rate Tesla, Inc. (TSLA) as a Hold with a composite score of 58.7/100 at a current price of $408.73. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (72th percentile) and momentum (58th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (38th percentile) and stability (53th percentile) tempers our overall conviction. We assign a Narrow Moat rating (49/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Tesla, Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 58.7/100 places it at rank #818 in our full 7,333-stock universe. As a mega-cap company with a $1.5T market capitalization, Tesla, Inc. benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

Revenue is growing at 10%, though momentum at the 58th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 18% (-24.7pp vs sector) narrow to operating margins of 6% (+4.4pp vs sector) and net margins of 5.3%, yielding a gross-to-net conversion rate of 30%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $408.73, Tesla, Inc. is trading near fair value based on current fundamentals. Our value factor score of 57/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 298.2x (a 1240% premium to the sector median of 22.3x), EV/EBITDA of 274.0x (at a premium), P/B of 18.7x, P/S of 16.3x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to Tesla, Inc.. The stock presents a balanced risk profile: elevated market sensitivity (beta of 2.17) and elevated valuation multiple (P/E 298.2x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 2.17); elevated valuation multiple (P/E 298.2x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 53th percentile and quality factor at the 72th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (8% D/E) limits balance sheet risk; large-cap scale ($1.5T) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Tesla, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 6.3%, and the balance sheet is managed within acceptable parameters (D/E: 8%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Tesla, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Tesla, Inc. receives a Hold rating with a composite score of 58.7/100 (rank #818 of 7,333). Our quantitative framework assigns a Narrow Moat (49/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 56/100.

Our analysis supports a neutral stance on Tesla, Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.