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 midsize 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 competitors in the automotive 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% |
Trends and Insights
After examining Tesla, the following trends can be inferred:
- The current Price to Earnings ratio for Tesla is 334.87, which is 18.93x above the industry norm, reflecting a higher valuation relative to the industry.
- With a Price to Book ratio of 20.19, Tesla might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
- The Price to Sales ratio of 17.89 suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
- The company has a higher Return on Equity (ROE) of 1.75%, which is 2.81% above the industry average, suggesting efficient use of equity to generate profits and demonstrating profitability and growth potential.
- With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, Tesla may face lower profitability or financial challenges.
- The company has lower gross profit of $5.05 Billion, indicating lower revenue after accounting for production costs.
- The company’s revenue growth of 11.57% is notably higher compared to the industry average of 0.91%, showcasing exceptional sales performance and strong demand for its products or services.
Debt to Equity Ratio
The debt-to-equity ratio measures the financial leverage of a company by evaluating its debt relative to its equity. When assessing Tesla against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
- Tesla has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.17.
- This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
Key Takeaways
For Tesla, the PE, PB, and PS ratios are all high compared to industry peers, indicating a potentially overvalued stock. On the other hand, Tesla’s high ROE suggests strong profitability, while low EBITDA and gross profit levels may raise concerns about operational efficiency. Additionally, the high revenue growth rate reflects a positive outlook for the company’s future performance within the Automobiles industry.