OK. Here we go again. After doing some research and watching some videos I concluded GM is doing much better than Tesla.
Why is that? GM just came out of Bankruptcy Protection in 2009. It became a totally new company since they went through a massive restructuring. GM is Americas Number 1 Automaker. Tesla is relatively new.
Compare GM to TESLA
GM Market Capitalization is about a 10% of that of Tesla.
But here we also see that Tesla has $0.53 Earnings per share while GM has $2.23 per share. You will be earning more with GM. For 1 Tesla share you can buy 15 GM shares and make a earning of 15 x 2.23 = $35 Dollars compared to 53 cents!!
Also the P/E Ratio with GM is $24.27, which tells you how much money you have to invest to make a Dollar on profit. Since the share price is around $54 Dollar and with an EPS of 2.23 it is easy to imaging that you need just under half of a share to make a Dollar, that would be $24.27. You follow?
How does the P/E look with Tesla? To calculate this: take the common share price, $852.23 and divide it by the EPS of $0.53. The result is $1,603.75. This is what you have to come up with to make a Dollar profit with Tesla as an investor. You will have to buy 2 shares at about $800 = $1,600 to make a Dollar!! Not so good!!
We also see that the Fair Value Estimate is about $306. This is a separate equation I dont want to outline here. Tesla overshot its target by far. Will it continue to grow at that pace?
On the other hand, GMs Fair Value Estimate is at $58, 4 Dollars above were it is trading. GM is overweight. Why would you buy Tesla when you have GM?
See images below, light blue circle.
Here we come to the next issue. It is so much fun!!!
Lets compare the Income Statements and the Balance Sheets.
Tesla: Total Revenue, all they sold, is almost 25 billion Dollar, GM sold almost 6 times that amount.
Deducting COGS, Costs of Goods Sold (shipping, storage, material costs...), and Operating Expenses (Rent, utilities, wages, and salaries...) GM generates an Operating Income of 5.4 billion Dollars. Tesla only of 80 million!!!
What does that mean?
Tesla has to sell $306 to make a Dollar in operating income!
GM has to sell only $25 to make a Dollars in operating income!
This is significant.
The EBITDA, Earnings before Interests, Taxes, Depreciation and Amortization, shows you how much money they can retain from their sales, how profitable is GM or Tesla operation?
EBITDA / Total Revenue
Tesla; $2174 million / 24,578 Million Dollar = Operating Margin of 8.8%
GM: $22,336 million / 137,237 million = Operating Margin of 16.3%
Industry Average is 9.8%
Also here GM is beating Tesla with a double whammy.
Last but not least, we look at the Capital Expenditure.
GM is spending 24 billion Dollar in new Capital investments
Tesla just 1.4 billion. That is just 5% of GMs budget! Where is the production coming from if you dont invest in upgrading of production facilities?
Thats good for now.
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