In the fast-paced and highly competitive business world, conducting thorough company analysis is essential for investors and industry observers. This article evaluates Tesla in relation to its major competitors in the Automobiles industry, providing valuable insights into the company’s performance.
Tesla Background
Tesla is a vertically integrated battery electric vehicle automaker and developer of real-world artificial intelligence software. The company has a diverse 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. In 2024, global deliveries were approximately 1.8 million vehicles. The company sells batteries for stationary storage and solar panels and solar roofs for energy generation. Additionally, Tesla owns a fast-charging network and an auto insurance business.
Financial Comparison
The following table highlights the key financial metrics of Tesla and its competitors:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 289.14 | 17.44 | 15.45 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.87 | 1.21 | 0.92 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 14.85 | 1.09 | 0.42 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 32.26 | 13.59 | 7.31 | 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 | 14.39 | 1.53 | 0.82 | -0.86% | $-0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 21.38 | 1.39 | 0.61 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 35.96 | 1.05 | 0.45 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.06 | 1.39 | 0.33 | -28.77% | $-0.01 | $-0.01 | -4.97% |
| Average | 17.52 | 2.8 | 1.39 | -1.06% | $229.23 | $247.75 | 0.91% |
Key Trends
When analyzing Tesla, the following trends become evident:
- The Price to Earnings ratio of 289.14 is 16.5x above the industry average, indicating a premium valuation associated with the stock.
- The elevated Price to Book ratio of 17.44 relative to the industry average by 6.23x suggests the company might be overvalued based on its book value.
- The stock’s relatively high Price to Sales ratio of 15.45, surpassing the industry average by 11.12x, may indicate an aspect of overvaluation in terms of sales performance.
- 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.
- With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, which is 0.02x below the industry average, the company may face lower profitability or financial challenges.
- 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’s revenue growth of 11.57% is notably higher compared to the industry average of 0.91%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity. A comparison between Tesla and its top 4 peers reveals the following information:
- Tesla has a stronger financial position indicated by its lower debt-to-equity ratio of 0.17.
- This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute 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 cost management compared to industry competitors.