In today’s fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. This article will delve into an extensive industry comparison, evaluating Tesla in relation to its major competitors in the Automobiles industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight the company’s performance in the industry.
Tesla Background
Tesla is a vertically integrated battery electric vehicle automaker and developer of real-world artificial intelligence software, which includes autonomous driving and humanoid robots. The company has multiple vehicles in its fleet, which include luxury and mid-size sedans, crossover SUVs, a light truck, and a semi-truck. Tesla also plans to begin selling a sports car and offer a robotaxi service. Global deliveries in 2024 were a little below 1.8 million vehicles. The company sells batteries for stationary storage for residential and commercial properties, including utilities, and solar panels and solar roofs for energy generation. Tesla also owns a fast-charging network and an auto insurance business.
Financial Comparison
The following table provides a comparison of key financial metrics for Tesla and its major competitors in the Automobiles industry:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 334.87 | 20.19 | 17.89 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.73 | 1.20 | 0.91 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.79 | 1.16 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 35.62 | 15.01 | 8.07 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.36 | 1.12 | 0.28 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 15.42 | 1.64 | 0.88 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 20.10 | 1.31 | 0.58 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 33.43 | 0.98 | 0.42 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.50 | 0.35 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 17.69 | 2.99 | 1.49 | -1.06% | $229.23 | $247.75 | 0.91% |
Key Trends and Insights
After a detailed analysis of Tesla, the following trends become apparent:
- The current Price to Earnings ratio of 334.87 is 18.93x higher than the industry average, indicating the stock is priced at a premium level according to market sentiment.
- The elevated Price to Book ratio of 20.19 relative to the industry average by 6.75x suggests the company might be overvalued based on its book value.
- The stock’s relatively high Price to Sales ratio of 17.89, surpassing the industry average by 12.01x, may indicate an aspect of overvaluation in terms of sales performance.
- With a Return on Equity (ROE) of 1.75% that is 2.81% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
- Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, which is 0.02x below the industry average, potentially indicating lower profitability or financial challenges.
- The gross profit of $5.05 Billion is 0.02x below that of its industry, suggesting potential lower revenue after accounting for production costs.
- The company is experiencing remarkable revenue growth, with a rate of 11.57%, outperforming the industry average of 0.91%.
Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity. Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company’s financial health and risk profile, aiding in informed decision-making. Tesla’s debt-to-equity ratio is 0.17, which is lower than its top 4 peers, indicating a stronger financial position.
Key Takeaways
For Tesla, the PE, PB, and PS ratios are all high compared to industry peers, indicating the stock may be overvalued based on earnings, book value, and sales. On the other hand, Tesla’s high ROE suggests strong profitability relative to shareholder equity, while low EBITDA and gross profit levels may raise concerns about operational efficiency. Additionally, the high revenue growth rate reflects Tesla’s strong sales performance compared to competitors in the Automobiles industry.