In today’s rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. This article undertakes 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, including 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 Indicators Comparison
The following table presents a comparison of key financial indicators for Tesla and its competitors:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 300.14 | 18.10 | 16.03 | 1.75% | $3.66 | $5.05 | 11.57% |
| General Motors Co | 15.16 | 1.12 | 0.43 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 32.01 | 13.48 | 7.25 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.49 | 1.13 | 0.29 | 5.29% | $3.67 | $4.3 | 9.39% |
| Thor Industries Inc | 21.58 | 1.40 | 0.62 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 36.28 | 1.06 | 0.46 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.06 | 1.35 | 0.32 | -28.77% | $-0.01 | $-0.01 | -4.97% |
| Average | 19.43 | 3.26 | 1.56 | -1.69% | $1.7 | $1.45 | 5.88% |
Analysis of Tesla’s Financial Indicators
The following trends become clear when conducting a detailed analysis of Tesla:
- The current Price to Earnings ratio for Tesla is 300.14, which is 15.45x above the industry norm, reflecting a higher valuation relative to the industry.
- With a Price to Book ratio of 18.1, which is 5.55x the industry average, Tesla might be considered overvalued in terms of its book value.
- The Price to Sales ratio of 16.03, which is 10.28x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
- Tesla has a higher Return on Equity (ROE) of 1.75%, which is 3.44% above the industry average, indicating efficient use of equity to generate profits and demonstrating profitability and growth potential.
- The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion is 2.15x above the industry average, highlighting stronger profitability and robust cash flow generation.
- With a higher gross profit of $5.05 Billion, which is 3.48x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
- The company’s revenue growth of 11.57% exceeds the industry average of 5.88%, indicating strong sales performance and market outperformance.
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. When examining Tesla in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
- Tesla is in a stronger financial position compared to its top 4 peers.
- The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.17.
Key Takeaways
For Tesla, the PE, PB, and PS ratios are all high compared to its industry peers, indicating that the stock may be overvalued based on these metrics. On the other hand, Tesla’s high ROE, EBITDA, gross profit, and revenue growth suggest strong financial performance and growth potential relative to its competitors in the Automobiles industry. Investors may want to consider these factors when evaluating Tesla’s position in the market.