Evaluating Tesla Against Peers In Automobiles Industry – Tesla (NASDAQ:TSLA)
April 1, 2024 11:00 AM | 3 min read |
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In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Tesla (NASDAQ:TSLA) in relation to its major competitors in the Automobiles industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company’s performance within the industry.
Tesla Background
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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 2023 were a little over 1.8 million vehicles.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 40.88 | 8.94 | 6.33 | 13.66% | $3.48 | $4.44 | 3.49% |
| Toyota Motor Corp | 11.47 | 1.58 | 1.18 | 4.21% | $2385.42 | $2685.29 | 23.44% |
| Honda Motor Co Ltd | 9.86 | 0.76 | 0.48 | 2.07% | $626.97 | $1174.13 | 21.45% |
| Ford Motor Co | 12.30 | 1.23 | 0.30 | -1.21% | $0.2 | $2.53 | 4.46% |
| General Motors Co | 6.20 | 0.81 | 0.36 | 2.99% | $4.51 | $3.31 | -0.3% |
| Li Auto Inc | 19.70 | 3.64 | 1.87 | 9.95% | $4.19 | $9.79 | 20.34% |
| Winnebago Industries Inc | 21.64 | 1.64 | 0.77 | -0.95% | $0.01 | $0.11 | -18.82% |
| Average | 13.53 | 1.61 | 0.83 | 2.84% | $503.55 | $645.86 | 8.43% |
By thoroughly analyzing Tesla, we can discern the following trends:
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At 40.88, the stock’s Price to Earnings ratio significantly exceeds the industry average by 3.02x, suggesting a premium valuation relative to industry peers.
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The elevated Price to Book ratio of 8.94 relative to the industry average by 5.55x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 6.33, which is 7.63x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a higher Return on Equity (ROE) of 13.66%, which is 10.82% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.48 Billion, which is 0.01x below the industry average. This potentially indicates lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $4.44 Billion, which indicates 0.01x below the industry average, potentially indicating lower revenue after accounting for production costs.
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With a revenue growth of 3.49%, which is much lower than the industry average of 8.43%, the company is experiencing a notable slowdown in sales expansion.
Debt To Equity Ratio
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The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 analyzing Tesla in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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Tesla exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.15.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
In comparison to its peers in the Automobiles industry, Tesla’s PE, PB, and PS ratios are all considered high, indicating that the stock may be overvalued. On the other hand, Tesla’s high ROE suggests strong profitability relative to its equity, while its low EBITDA, gross profit, and revenue growth may raise concerns about the company’s operational performance and growth potential within the industry.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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