Comparing Tesla With Industry Competitors In Automobiles Industry

In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Tesla (NASDAQ:TSLA) against its key competitors in the Automobiles industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for 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	316.99	19.12	16.93	1.75%	$3.66	$5.05	11.57%
Toyota Motor Corp	9.54	1.17	0.89	2.54%	$1824.36	$1968.84	8.15%
General Motors Co	15.83	1.17	0.44	1.95%	$5.74	$3.11	-0.34%
Ferrari NV	35.58	14.99	8.06	10.42%	$0.67	$0.88	7.4%
Ford Motor Co	11.35	1.12	0.28	5.29%	$3.67	$4.3	9.39%
Li Auto Inc	15.83	1.68	0.90	-0.86%	$-0.71	$4.47	-36.17%
Thor Industries Inc	19.79	1.28	0.57	0.5%	$0.11	$0.32	11.5%
Winnebago Industries Inc	31.76	0.93	0.40	0.45%	$0.03	$0.09	12.32%
Workhorse Group Inc	0.07	1.49	0.35	-28.77%	$-0.01	$-0.01	-4.97%
Average	17.47	2.98	1.49	-1.06%	$229.23	$247.75	0.91%

After thoroughly examining Tesla, the following trends can be inferred:

• Notably, the current Price to Earnings ratio for this stock, 316.99, is 18.14x above the industry norm, reflecting a higher valuation relative to the industry.

• The elevated Price to Book ratio of 19.12 relative to the industry average by 6.42x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 16.93, which is 11.36x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 1.75% that is 2.81% 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's revenue growth of 11.57% exceeds the industry average of 0.91%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.

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.

In terms of the Debt-to-Equity ratio, Tesla can be assessed by comparing it to its top 4 peers, resulting in the following observations:

• 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 0.17.

• 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

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 performance potential, while the low EBITDA and gross profit levels may raise concerns about profitability and operational efficiency. Overall, Tesla's valuation appears stretched based on traditional metrics, but its growth prospects and return on equity are promising compared to industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.