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, our objective is 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, which includes autonomous driving and humanoid robots. The company has multiple vehicles in its fleet, including 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 financial comparison between 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 | 311.50 | 18.78 | 16.64 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.71 | 1.19 | 0.91 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.87 | 1.17 | 0.45 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 36.06 | 15.19 | 8.17 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.51 | 1.13 | 0.29 | 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 | 19.89 | 1.29 | 0.57 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 31.25 | 0.92 | 0.39 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.60 | 0.38 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 17.54 | 3.02 | 1.51 | -1.06% | $229.23 | $247.75 | 0.91% |
Trends and Insights
Upon closer analysis of Tesla, the following trends become apparent:
- The current Price to Earnings ratio of 311.5 is 17.76x higher than the industry average, indicating the stock is priced at a premium level according to market sentiment.
- With a Price to Book ratio of 18.78, which is 6.22x the industry average, Tesla might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
- With a relatively high Price to Sales ratio of 16.64, which is 11.02x the industry average, the stock might be considered overvalued based on 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.
- 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.
- With lower gross profit of $5.05 Billion, which indicates 0.02x below the industry average, the company may experience 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 an important measure to assess the financial structure and risk profile of a company. 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.
By analyzing Tesla in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
- When considering the debt-to-equity ratio, Tesla exhibits a stronger financial position compared to its top 4 peers.
- This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.17, which can be perceived as a positive aspect by investors.
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 a positive trend in sales expansion compared to competitors in the Automobiles industry.