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Wall Street JournalComparative Study: Tesla And Industry Competitors In Automobiles Industry
In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Tesla (NASDAQ:TSLA) in relation to its major competitors in the Automobiles industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in 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 | 322.25 | 19.43 | 17.22 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.40 | 1.15 | 0.88 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.36 | 1.13 | 0.43 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 34.67 | 14.61 | 7.85 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.38 | 1.12 | 0.28 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 14.94 | 1.59 | 0.85 | -0.86% | $-0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 19.73 | 1.28 | 0.57 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 45.49 | 0.95 | 0.42 | 1.12% | $0.04 | $0.1 | 7.82% |
| Workhorse Group Inc | 0.07 | 1.49 | 0.35 | -28.77% | $-0.01 | $-0.01 | -4.97% |
| Average | 18.88 | 2.92 | 1.45 | -0.98% | $229.23 | $247.75 | 0.35% |
After thoroughly examining Tesla, the following trends can be inferred:
The current Price to Earnings ratio of 322.25 is 17.07x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
The elevated Price to Book ratio of 19.43 relative to the industry average by 6.65x suggests company might be overvalued based on its book value.
The Price to Sales ratio of 17.22, which is 11.88x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 1.75% that is 2.73% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, which is 0.02x below the industry average, potentially indicating 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 is experiencing remarkable revenue growth, with a rate of 11.57%, outperforming the industry average of 0.35%.
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:
In terms of the debt-to-equity ratio, Tesla has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.17.
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.
This article was generated by Benzinga's automated content engine and reviewed by an editor.