In today’s fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. This article delves into an extensive industry comparison, evaluating Tesla in comparison to its major competitors within the Automobiles industry. By analyzing critical financial metrics, market position, and growth potential, we aim to provide valuable insights for investors and offer a deeper understanding of 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, including 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 compares key financial metrics of Tesla with its industry peers:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 313.40 | 18.90 | 16.74 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.51 | 1.17 | 0.89 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.71 | 1.16 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 35.28 | 14.86 | 7.99 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.31 | 1.11 | 0.28 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 15.93 | 1.69 | 0.90 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 19.74 | 1.28 | 0.57 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 32.15 | 0.94 | 0.40 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.45 | 0.34 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 17.46 | 2.96 | 1.48 | -1.06% | $229.23 | $247.75 | 0.91% |
Key Trends
By closely examining Tesla, we can identify the following trends:
- At 313.4, the stock’s Price to Earnings ratio significantly exceeds the industry average by 17.95x, suggesting a premium valuation relative to industry peers.
- It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 18.9 which exceeds the industry average by 6.39x.
- The Price to Sales ratio of 16.74, which is 11.31x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
- The Return on Equity (ROE) of 1.75% is 2.81% above the industry average, highlighting 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. This potentially indicates lower profitability or financial challenges.
- Compared to its industry, the company has lower gross profit of $5.05 Billion, which indicates 0.02x below the industry average, potentially indicating lower revenue after accounting for production costs.
- With a revenue growth of 11.57%, which surpasses the industry average of 0.91%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company’s financial health and its reliance on debt financing. 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 light of the Debt-to-Equity ratio, a comparison between Tesla and its top 4 peers reveals the following information:
- In terms of the debt-to-equity ratio, Tesla has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
- This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.17.
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 cost management compared to industry competitors.