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.
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.
Company Comparison
The following table compares key financial metrics of Tesla with its primary competitors:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 309.63 | 18.67 | 16.54 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.96 | 1.22 | 0.93 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.82 | 1.17 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 36.18 | 15.24 | 8.19 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.99 | 1.18 | 0.30 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 15.60 | 1.66 | 0.89 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 20.50 | 1.33 | 0.59 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 34.96 | 1.02 | 0.44 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.56 | 0.37 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 18.13 | 3.05 | 1.52 | -1.06% | $229.23 | $247.75 | 0.91% |
Trends and Observations
After examining Tesla, the following trends can be inferred:
- The current Price to Earnings ratio of 309.63 is 17.08x higher than the industry average, indicating the stock is priced at a premium level according to market sentiment.
- The elevated Price to Book ratio of 18.67 relative to the industry average by 6.12x suggests the company might be overvalued based on its book value.
- The Price to Sales ratio of 16.54, which is 10.88x the industry average, 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.
- 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.
- 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.
- The company is experiencing remarkable revenue growth, with a rate of 11.57%, outperforming the industry average of 0.91%.
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. By evaluating Tesla against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
- 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 the company’s operational efficiency and financial health when compared to industry competitors.