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.
Financial Comparison
The following table highlights Tesla’s financial metrics compared to its peers in the industry:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 301.72 | 18.19 | 16.12 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 10.38 | 1.28 | 0.97 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.42 | 1.14 | 0.43 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 33.16 | 13.97 | 7.51 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.62 | 1.14 | 0.29 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 14.80 | 1.57 | 0.84 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 21.74 | 1.41 | 0.62 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 37.34 | 1.09 | 0.47 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.42 | 0.33 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 18.07 | 2.88 | 1.43 | -1.06% | $229.23 | $247.75 | 0.91% |
Key Trends and Insights
By conducting a comprehensive analysis of Tesla, the following trends become evident:
- The Price to Earnings ratio of 301.72 for this company is 16.7x above the industry average, indicating a premium valuation associated with the stock.
- The elevated Price to Book ratio of 18.19 relative to the industry average by 6.32x suggests the company might be overvalued based on its book value.
- With a relatively high Price to Sales ratio of 16.12, which is 11.27x the industry average, the stock might be considered overvalued based on sales performance.
- The company has a higher Return on Equity (ROE) of 1.75%, which is 2.81% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
- 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.
- The gross profit of $5.05 Billion is 0.02x below that of its industry, suggesting potential lower revenue after accounting for production costs.
- The company’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 is a financial metric that helps determine the level of financial risk associated with a company’s capital structure. 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.
When evaluating Tesla alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
- Among its top 4 peers, Tesla has a stronger financial position with a lower debt-to-equity ratio of 0.17.
- This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively 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.