Tesla is one of the most actively traded stocks on the market. He is one of the most expensive in various respects. Is it overrated?
In this article, we will look at this issue by comparing Elon Musk’s company to other major car manufacturers. It will use general financial ratios and real numbers so you can make your own decisions about Tesla stock.
|Market capitalization||USD 635 billion||$ 83 billion||$ 50.7 billion|
|Enterprise value||USD 629 billion||$ 165 billion||$ 164 billion|
|Forward P / E||161x||11x||11.6 times|
|EBITDA||$ 4.27 billion||USD 13.6 billion||$ 4.8 billion|
|Income||USD 31.5 billion||$ 122.5 billion||$ 127.1 billion|
|Price / Revenue||23x||0.7x||0.4x|
|Expected revenue growth||55%||thirteen%||thirteen%|
|Number of cars sold per year||500,000||6.8 million||4.2 million|
|Representative offices in the USA||4 355||130||3,000|
Tesla Valuation: Market Cap
Tesla is the world’s most valuable automaker today. Its market capitalization (the price of a share multiplied by the number of shares outstanding) of $ 629 billion puts it the sixth largest company on the US stock market. The EV company is worth nearly 8 times GM and nearly 13 times F.
However, TSLA has a much cleaner balance sheet because it only has $ 13 billion in debt. GM and F, on the other hand, have more than $ 100 billion in debt each. Thus, market capitalization underestimates the true value of GM and F.
This is where stock market investors often use “enterprise value” to judge the size of a company.
Enterprise Value = Market Cap + Debt - Cash
For this indicator, TSLA costs about 4 times more than General Motors and Ford Motor.
Tesla Valuation: Price / Earnings Ratio
The price / earnings ratio, or P / E, is one of the most common valuation metrics in the stock market. It is simply the company’s earnings per share divided by its share price. In terms of P / E ratio, Tesla is significantly more expensive than other car manufacturers such as GM and Ford.
Tesla is trading over 1000 times its historical profit and 161 times its estimated future profit. This is more than 10 times more than its gasoline-powered competitors.
Price / sales or price / earnings is another measurement metric. Tesla is trading at 23x sales, the eighth-highest multiple for all members of the S&P 500. GM and F, on the other hand, trade less than 1x profit. But by this yardstick, Tesla is worth more than 20 times as much.
Cash flow creation
In addition to profits, analysts can also use cash flow to value Tesla stock. Cash flow adjusts net income by eliminating accrual accounting mechanisms and investment income. Analysts can also use cash lag to compare stock prices.
For this indicator, Tesla’s valuation is about 208 times higher than cash flow. GM trades less than 5x with cash flow and F trades about 7x.
Is Tesla overpriced?
One of the main reasons Tesla is valued much higher than its peers is height… The electric car maker increased its sales by 45 percent last year. Wall Street analysts expect another 55 percent growth this year.
GM sales grew only 22 percent last year, while F fell 10 percent. Both are expected to grow by about 13 percent this year.
Tesla Assessment: Stores and Units
Investors can also use non-financial metrics to compare Tesla to other car manufacturers. How many cars are on sale? How many locations do you need to attract customers?
For this indicator, TSLA is also much more expensive than analogues. The company operates just 130 physical stores in the US, which is less than 1/30 of GM’s footprint and 1/20 of its reach.
|2020 Change||Change since the beginning of the year|
|General Motors||+ 14%||+ 46%|
|Ford Motor||-5.5%||+ 45%|
TSLA overcomes this in part with a strong online sales model. Over time, however, this can create a potential risk. Traditional automakers have much broader distribution and marketing networks across the country. This could allow them to attract many more customers very quickly once they start making more electric models.
In conclusion, Tesla shares are highly valued based on metrics such as P / E and price / sales. This is mainly due to its strong gains over traditional automakers such as GM and F. Tesla did the best in 2020 but lags behind this year after investors switched to value stocks. In the long term, the big question is whether TSLAs will continue to grow so rapidly, especially when the competition heats up.