Analyzing Tesla In Comparison To Competitors In Automobiles Industry
In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Tesla (NASDAQ:TSLA) 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 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 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. 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 | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 337.85 | 20.37 | 18.05 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.46 | 1.16 | 0.88 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.60 | 1.15 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 35.19 | 14.83 | 7.97 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.68 | 1.15 | 0.29 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 15.44 | 1.64 | 0.88 | -0.86% | $-0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 19.41 | 1.26 | 0.56 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 44 | 0.92 | 0.40 | 1.12% | $0.04 | $0.1 | 7.82% |
| Workhorse Group Inc | 0.07 | 1.57 | 0.37 | -28.77% | $-0.01 | $-0.01 | -4.97% |
| Average | 18.86 | 2.96 | 1.47 | -0.98% | $229.23 | $247.75 | 0.35% |
After examining Tesla, the following trends can be inferred:
The Price to Earnings ratio of 337.85 for this company is 17.91x above the industry average, indicating a premium valuation associated with the stock.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 20.37 which exceeds the industry average by 6.88x.
With a relatively high Price to Sales ratio of 18.05, which is 12.28x the industry average, the stock might be considered overvalued based on sales performance.
The Return on Equity (ROE) of 1.75% is 2.73% above the industry average, highlighting efficient use of equity to generate profits.
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 company has lower gross profit of $5.05 Billion, which indicates 0.02x below the industry average. This potentially indicates lower revenue after accounting for production costs.
The company's revenue growth of 11.57% exceeds the industry average of 0.35%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
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 considering the Debt-to-Equity ratio, Tesla can be compared to its top 4 peers, leading to the following observations:
Compared to its top 4 peers, 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 levels may raise concerns about the company's operational efficiency and financial health when compared to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.