In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. This article will carry out an in-depth industry comparison, assessing Tesla alongside its primary competitors in the Automobiles industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to investors and shed light on the company’s performance within 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.
Key Financial Metrics Comparison
The following table provides a comparison of key financial metrics between Tesla and its competitors:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 334.76 | 20.19 | 17.88 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.58 | 1.18 | 0.90 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.82 | 1.16 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 35.57 | 14.99 | 8.06 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.42 | 1.12 | 0.28 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 15.48 | 1.64 | 0.88 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 20.14 | 1.31 | 0.58 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 33.27 | 0.97 | 0.42 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.53 | 0.36 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 17.67 | 2.99 | 1.49 | -1.06% | $229.23 | $247.75 | 0.91% |
Trends and Insights
When analyzing Tesla, the following trends become evident:
- The current Price to Earnings ratio for this stock, 334.76, is 18.95x above the industry norm, reflecting a higher valuation relative to the industry.
- 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 17.88, surpassing the industry average by 12.0x, may indicate an aspect of overvaluation in terms of sales performance.
- The Return on Equity (ROE) of 1.75% is 2.81% above the industry average, highlighting efficient use of equity to generate profits.
- With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, which is 0.02x below the industry average, the company may face lower profitability or financial challenges.
- The company has lower gross profit of $5.05 Billion, which indicates 0.02x below the industry average. This potentially indicates 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 (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. In terms of the Debt-to-Equity ratio, Tesla can be assessed by comparing it to its top 4 peers, resulting in the following observations:
- Compared to its top 4 peers, Tesla has a stronger financial position indicated by its lower debt-to-equity ratio of 0.17.
- This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
The high PE, PB, and PS ratios suggest that Tesla is relatively overvalued compared to its peers in the Automobiles industry. On the other hand, the high ROE and revenue growth indicate strong profitability and potential for future growth. However, the low EBITDA and gross profit figures may raise concerns about Tesla’s operational efficiency and financial health within the industry sector.