Financial Position
Correct:
- The Tesla company has a Current Ratio of 2.02, indicating sufficient assets to cover short-term liabilities.
- Interest Coverage Ratio of 21.88 suggests that the Tesla can easily cover its interest payments.
Incorrect:
- Debt/Equity Ratio of 0.18 is good, but it is essential to compare it with the industry average.
- Debt/EBITDA Ratio of 0.94 indicates low debt, but cash flow must be monitored for future growth plans.
Cash Flow
Correct:
- The Tesla‘s Operating Cash Flow is $14.92 billion, reflecting strong cash flow.
- Free Cash Flow (FCF) of $3.58 billion indicates good financial health.
Incorrect:
- Capital Expenditures of -$11.34 billion indicate high investment. If strategically allocated, it’s good; otherwise, it may impact cash flow.
Financial Efficiency
Correct:
- Return on Equity (ROE) of 10.42% is decent, showing effective use of shareholder capital.
- Revenue Per Employee of $772,384 and Profits Per Employee of $56,738 demonstrate strong productivity.
Incorrect:
- Return on Capital Employed (ROCE) of 8.27% is slightly low, suggesting room for improvement in investment returns.
Margins
Correct:
- Gross Margin of 17.86% and Operating Margin of 7.84% indicate good cost control.
- EBITDA Margin of 13.34% signifies healthy operational profitability.
Incorrect:
- FCF Margin of 3.67% is slightly low, indicating some constraints in free cash flow generation.
Valuation Ratios
Correct:
- PE Ratio of 113.03 and Forward PE Ratio of 82.93 are common for high-growth companies.
- PEG Ratio of 4.75 suggests the stock is priced for growth but might be expensive.
Incorrect:
- P/B Ratio of 10.17 and P/S Ratio of 7.55 are high, indicating the Tesla stock might be overvalued.
Enterprise Valuation
Correct:
- EV/EBITDA of 55.17 and EV/FCF of 200.70 indicate a high valuation, but future growth potential exists.
Incorrect:
- EV/Earnings of 100.80 shows the Tesla stock is highly valued compared to its earnings.
Income Statement
Correct:
- Revenue of $97.69 billion and Net Income of $7.13 billion reflect strong earnings.
- Earnings Per Share (EPS) of $2.04 is a positive indicator.
Incorrect:
- Operating Income of $7.66 billion and EBITDA of $13.08 billion suggest relatively lower operational profitability.
Balance Sheet
Correct:
- Cash & Cash Equivalents of $36.58 billion indicate strong liquidity.
- Net Cash Position of $22.94 billion highlights a solid financial position.
Incorrect:
- Total Debt of $13.62 billion, while manageable, should be monitored for future obligations.
Scoring System
Correct:
- Altman Z-Score of 10.84 indicates a very low probability of bankruptcy.
- Piotroski F-Score of 5 suggests an average financial strength.
Incorrect:
- Piotroski F-Score of 5 should ideally be 7+, which would indicate stronger financial health.
Should You Buy This Stock?
Reasons to Buy:
- Strong Revenue and Profitability – Consistent revenue growth and a healthy net income suggest a stable financial position.
- Solid Cash Reserves – High cash and cash equivalents of $36.58 billion provide financial security and growth opportunities.
- Strong Institutional Ownership – Nearly 48% owned by institutions, indicating confidence from large investors.
- Growth Potential – A high EPS Growth Forecast (5Y) of 37.86% suggests strong future performance.
- Low Debt Levels – Debt/Equity ratio of 0.18 shows minimal reliance on borrowed funds.
Reasons to Avoid:
- Overvaluation – A P/E ratio of 113.03 and P/B ratio of 10.17 suggest the stock is expensive compared to industry peers.
- Lower Margins – While gross margins are decent, operating and FCF margins are relatively low, which could impact profitability.
- High Capital Expenditure – Heavy investments might reduce short-term profits and impact cash flow.
- Average Piotroski Score – A score of 5 suggests the company is not in the best financial strength category.
- Stock Price Volatility – High valuation can lead to increased price fluctuations, making it risky for conservative investors.
Final Conclusion
Tesla stock’s financial position is strong, but its valuation appears expensive (overvalued). Investors should carefully analyze growth prospects and compare industry benchmarks before investing. If you are a long-term investor looking for high growth potential and can tolerate volatility, this stock may be a good buy. However, for value investors seeking reasonable pricing, it might be overvalued at its current levels.
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