Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Tesla TSLA in comparison to its major competitors within the Automobiles industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.
Tesla Background
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. The company sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. Tesla has multiple vehicles in its fleet, which include luxury and midsize sedans and crossover SUVs. The company also plans to begin selling more affordable sedans and small SUVs, a light truck, a semi truck, and a sports car. Global deliveries in 2022 were a little over 1.3 million vehicles.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 69.53 | 12.82 | 7.82 | 3.54% | $3.32 | $4.18 | 8.84% |
| Toyota Motor Corp | 10.02 | 1.21 | 0.94 | 4.11% | $2336.09 | $2369.94 | 24.05% |
| Honda Motor Co Ltd | 8.38 | 0.61 | 0.42 | 2.08% | $563.29 | $1090.54 | 17.12% |
| General Motors Co | 4.92 | 0.64 | 0.28 | 4.16% | $6.68 | $5.36 | 5.35% |
| Ford Motor Co | 7.37 | 1.02 | 0.26 | 2.73% | $3.32 | $3.8 | 11.19% |
| Li Auto Inc | 125.32 | 3.89 | 2.84 | 5.51% | $2.96 | $7.64 | 271.21% |
| Thor Industries Inc | 20.82 | 1.53 | 0.58 | 1.36% | $0.16 | $0.36 | -19.54% |
| Winnebago Industries Inc | 12.63 | 1.44 | 0.71 | 1.9% | $0.05 | $0.12 | -19.87% |
| Average | 27.07 | 1.48 | 0.86 | 3.12% | $416.08 | $496.82 | 41.36% |
By analyzing Tesla, we can infer the following trends:
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The Price to Earnings ratio of 69.53 for this company is 2.57x above the industry average, indicating a premium valuation associated with the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 12.82 which exceeds the industry average by 8.66x.
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The Price to Sales ratio of 7.82, which is 9.09x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 3.54% that is 0.42% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.32 Billion, which is 0.01x below the industry average, potentially indicating lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $4.18 Billion, which indicates 0.01x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company is witnessing a substantial decline in revenue growth, with a rate of 8.84% compared to the industry average of 41.36%, which indicates a challenging sales environment.
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:
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When considering the debt-to-equity ratio, Tesla exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.15, which can be perceived as a positive aspect by investors.
Key Takeaways
For the valuation analysis of Tesla in the Automobiles industry, the PE, PB, and PS ratios indicate that Tesla's valuation is relatively high compared to its peers. This suggests that investors are willing to pay a premium for Tesla's earnings, book value, and sales. On the other hand, Tesla's high ROE indicates that the company is generating strong returns on shareholder equity. However, the low EBITDA, gross profit, and revenue growth suggest that Tesla's profitability and revenue growth are relatively low compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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