In today’s rapidly changing and competitive business landscape, it’s essential for investors and industry enthusiasts to thoroughly analyze companies. This article will conduct a comprehensive industry comparison, evaluating Tesla against its key competitors in the Automobiles industry.
Tesla Background
Tesla is a vertically integrated battery electric vehicle automaker and developer of real-world artificial intelligence software, including autonomous driving and humanoid robots. The company has multiple vehicles in its fleet, including 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 approximately 1.8 million vehicles.
Comparison of Key Financial Metrics
The following table compares Tesla’s key financial metrics with its industry peers:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 316.99 | 19.12 | 16.93 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.54 | 1.17 | 0.89 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.83 | 1.17 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 35.58 | 14.99 | 8.06 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.35 | 1.12 | 0.28 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 15.83 | 1.68 | 0.90 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 19.79 | 1.28 | 0.57 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 31.76 | 0.93 | 0.40 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.49 | 0.35 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 17.47 | 2.98 | 1.49 | -1.06% | $229.23 | $247.75 | 0.91% |
Trends and Insights
After examining Tesla’s financial metrics, the following trends can be inferred:
- The current Price to Earnings ratio for Tesla is 316.99, which is 18.14x above the industry norm, reflecting a higher valuation relative to the industry.
- The elevated Price to Book ratio of 19.12 is 6.42x the industry average, suggesting the company might be overvalued based on its book value.
- With a relatively high Price to Sales ratio of 16.93, which is 11.36x the industry average, the stock might be considered overvalued based on sales performance.
- Tesla’s Return on Equity (ROE) of 1.75% is 2.81% above the industry average, indicating efficient use of equity to generate profits.
- 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.
- Tesla’s revenue growth of 11.57% exceeds the industry average of 0.91%, indicating strong sales performance and market outperformance.
Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate a company’s capital structure and financial leverage. Tesla’s D/E ratio can be assessed by comparing it to its top 4 peers, resulting in the following observations:
- Tesla exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated 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 seen as a positive aspect for 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 performance potential, while the low EBITDA and gross profit levels may raise concerns about profitability and operational efficiency. Overall, Tesla’s valuation appears stretched based on traditional metrics, but its growth prospects and return on equity are promising compared to industry peers.