Tesla financial analysis
Short Description
for the course Financial Management...
Description
2015 FEP – FEP – School School of Economics and Management of Porto Filipe Sá Couto;Pedro Pilar;Guilherme Baptista;Rui Tavares Financial Management
VALUATION ECONOMIC AND FINANCIAL ANALYSIS Filipe Sá Couto 201200211 | Guilherme Baptista 201201371 Pedro Pilar 201502398 | Rui Tavares 201205663
INDEX 1.
Abstract .......................... ............. ......................... ......................... ......................... ......................... .......................... ........................ ........... 3
2.
The Company .......................................................................................... 4
2.1.
History ................................... ..................................................... ................................... .................................. ................................... ...................... .... 4
2.2.
Product Portfolio........................................... ............................................................ .................................. ................................. ................4
2.3.
Mission and Vision ................................. .................................................. ................................... ................................... ..................... .... 7
2.4.
Strategy ................................... ..................................................... ................................... .................................. ................................... .................... 7
2.5.
SWOT Analysis .................................. .................................................... ................................... .................................. ........................... ..........9
2.6.
The Electric Vehicles Sector................................... .................................................... ................................... .................... .. 10
3.
Macroeconomic Overview .................................................................. 11
3.1.
Economy ................................. ................................................... ................................... .................................. .................................. ................. 11
3.2.
Main Sectors of Economy ......................................... .......................................................... .................................. ................. 12
4.
Indicators of Performance .................................................................... 14
4.1.
Market Performance Performance ................................... .................................................... ................................... ............................... ............. 14
4.2.
Dupont analysis.................... analysis...................................... ................................... .................................. ................................... .................... .. 14
5.
Tesla Valuation ...................................................................................... 17
5.1.
Cash Flow Analysis ................................................. ................................................................... ................................... ................... .. 17
5.1.1.
Previous Years Cash Flows ..................................................................................... 17
5.2.
Projection of Future Cash Flows .................... ...................................... ................................... ............................ ........... 18
5.3.
Weighted Average Cost of Capital (WACC) ................................... ............................................. .......... 20
5.3.1. 5.3.2. 5.3.3.
Transition Period Beta Estimation .......................................................................... 20 Transition Growth WACC estimation .................................................................... 21 WACC Stable Period ............................................................................................... 22
5.4.
Sensitivity Analysis ................................. .................................................. ................................... ................................... ................... .. 23
5.5.
Relative Valuation ................................. .................................................. ................................... ................................... ................... .. 24
5.6.
Bankruptcy Risk.......................... Risk............................................ ................................... .................................. ............................... .............. 29
5.7.
Monte Carlo Simulation ...................... ....................................... ................................... ................................... ...................... ..... 30
6.
References ............................................................................................. 33
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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INDEX 1.
Abstract .......................... ............. ......................... ......................... ......................... ......................... .......................... ........................ ........... 3
2.
The Company .......................................................................................... 4
2.1.
History ................................... ..................................................... ................................... .................................. ................................... ...................... .... 4
2.2.
Product Portfolio........................................... ............................................................ .................................. ................................. ................4
2.3.
Mission and Vision ................................. .................................................. ................................... ................................... ..................... .... 7
2.4.
Strategy ................................... ..................................................... ................................... .................................. ................................... .................... 7
2.5.
SWOT Analysis .................................. .................................................... ................................... .................................. ........................... ..........9
2.6.
The Electric Vehicles Sector................................... .................................................... ................................... .................... .. 10
3.
Macroeconomic Overview .................................................................. 11
3.1.
Economy ................................. ................................................... ................................... .................................. .................................. ................. 11
3.2.
Main Sectors of Economy ......................................... .......................................................... .................................. ................. 12
4.
Indicators of Performance .................................................................... 14
4.1.
Market Performance Performance ................................... .................................................... ................................... ............................... ............. 14
4.2.
Dupont analysis.................... analysis...................................... ................................... .................................. ................................... .................... .. 14
5.
Tesla Valuation ...................................................................................... 17
5.1.
Cash Flow Analysis ................................................. ................................................................... ................................... ................... .. 17
5.1.1.
Previous Years Cash Flows ..................................................................................... 17
5.2.
Projection of Future Cash Flows .................... ...................................... ................................... ............................ ........... 18
5.3.
Weighted Average Cost of Capital (WACC) ................................... ............................................. .......... 20
5.3.1. 5.3.2. 5.3.3.
Transition Period Beta Estimation .......................................................................... 20 Transition Growth WACC estimation .................................................................... 21 WACC Stable Period ............................................................................................... 22
5.4.
Sensitivity Analysis ................................. .................................................. ................................... ................................... ................... .. 23
5.5.
Relative Valuation ................................. .................................................. ................................... ................................... ................... .. 24
5.6.
Bankruptcy Risk.......................... Risk............................................ ................................... .................................. ............................... .............. 29
5.7.
Monte Carlo Simulation ...................... ....................................... ................................... ................................... ...................... ..... 30
6.
References ............................................................................................. 33
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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1. ABSTRACT We, students of Master in Management, were asked in the Financial Management course to do an evaluation of the company Tesla Motors as a mandatory requisite of the course. This work has the final goal of reaching to an estimate value of Tesla Motors in the near future, a US car manufactory that is nowadays trending due their idea of revolutionizing transportation, using only electric energy. This assignment will be divided in two main parts. The first one will be focusing on the actual and past situation of Tesla, talking a little bit about the company itself, history, goals, plans, strategy, financial situation as well as a macroeconomic consideration watching indicators like inflation, Gross Domestic Product (GDP), unemployment, etc. This way we can have a better idea of the surroundings of the company to do an improved forecasting of it’s future. The second part is directed to the future life of Tesla, as we will preview, using some assumptions, the actual value of the company.
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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2. THE COMPANY 2.1.
History
Tesla Motors was founded in 2003 by a group of engineers in Silicon Valley who wanted to prove that electric cars could be better than gasoline-powered cars. With incredible power, and zero emissions, Tesla’s products would be cars without compromise. Each new generation would be increasingly affordable, helping the company work towards its mission: to accelerate the world’s transition to sustainable transport.
2.2.
Product Portfolio
Tesla’s engineers first designed a powertrain for a sports car built around an AC induction motor, patented in 1888 by Nikola Tesla, the inventor who inspired the company’s name. The resulting Tesla Roadster was launched in 2008. Accelerating from 0 to 60 mph in 3.7 seconds and achieving a range of 245 miles per charge of its lithium ion battery, the Roadster set a new standard for electric mobility. Tesla would sell more than 2,400 Roadsters, now on the road in more than 30 countries.
Tesla Roadster In 2012, Tesla launched Model S, the world’s first premium electric sedan. Built from the ground up to be 100 percent electric, Model S has redefined the very concept of a four-door car. With room for seven passengers, Model S provides the comfort and utility of a family sedan while achieving the acceleration of a sports car: 0 to 60 mph in about five seconds. Its flat battery pack is integrated into the chassis and sits below the occupant cabin, lending the car a low center of gravity that enables outstanding road holding and handling while driving 265 miles per charge. Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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Model S was named Motor Trend’s 2013 Car of the Year and achieved a 5 -star safety rating from the U.S. National Highway Traffic Safety Administration. In late 2014, Tesla CEO Elon Musk unveiled two dual motor all-wheel drive configurations of Model S that further improve the vehicle’s handling and performance. The 85D features a high efficiency motor at the front and rear, giving the car unparalleled control of traction in all conditions. The P85D pairs a high efficiency front motor with a performance rear motor for supercar acceleration, achieving a 0 to 60 mph time of 3.2 seconds – the fastest four-door production car ever made.
Model S Now with more than 50,000 vehicles on the road worldwide, Tesla is preparing to launch Model X, a crossover vehicle that enters volume production in 2015. Featuring exhilarating acceleration, falcon wing doors, and room for three rows of seating, Model X defies categorization.
Model X
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Tesla owners enjoy the benefit of charging at home so they never have to visit a gas station or spend a cent on gasoline. For long distance journeys, Tesla’s Supercharger network provides convenient and free access to high speed charging, replenishing half a charge in as little as 20 minutes. Superchargers now connect popular routes in North America, Europe, and Asia Pacific. Tesla’s vehicles are produced at its factory in Fremont, California, previously home to New United Motor Manufacturing Inc., a joint venture between Toyota and General Motors. The Tesla Factory has returned thousands of jobs to the area and is capable of producing 1,000 cars a week. The company is expanding its manufacturing footprint into other areas, including in Tilburg, the Netherlands, where it has an assembly facility, and Lathrop, California, where it has a specialized production plant. To reduce the costs of lithium ion battery packs, Tesla and key strategic partners including Panasonic have begun construction of a gigafactory in Nevada that will facilitate the production of a mass-market affordable vehicle, Model 3. By 2020, the gigafactory will produce more lithium ion cells than all of the world’s combined output in 2013. The gigafactory will also p roduce battery packs intended for use in stationary storage, helping to improve robustness of the electrical grid, reduce energy costs for businesses and residences, and provide a backup supply of power. Tesla is not just an automaker, but also a technology and design company with a focus on energy innovation. Gigafactory in Nevada
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2.3.
Mission and Vision
Tesla Motors company mission statement is to “Move from a mine -and-burn hydrocarbon economy towards a sustainable, solar electric economy”.
“Create the most compelling car company of the 21th century by driving the World´s transition to electric vehicles”.
2.4.
Strategy
Electric vehicles are not a recent concept and most top automakers have in their portfolio. In 2014 the best selling EV was Nissan´s Leaf, the automaker sold more than 60.000 units, more than twice the number units sold of Tesla´s Model S.
One of the biggest challenges the industry face EV refers to “range anxiety”, so this important issue has become part of the brand strategy. No driver will want to purchase a vehicle that runs out of energy too early, with nowhere to recharge the battery.
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So Tesla addressed this issue by offering a driving range in excess of 250 miles. Now, that's more than twice the range offered by the nearest competitor, according to data compiled by Cheat Sheet. In addition, 250 miles is a pretty decent range for driving in city. Other point strategy is the Superchargers. The Superchargers are free connectors that Tesla has placed near strategic locations such as restaurants, shopping centers, and WiFi hotspots as part of its Destination Charging program. Tesla has 498 stations with 2,804 Superchargers. The company is planning to install these Superchargers at several other locations in the next couple of years.
Tesla’s distribution strategy is very different from that of other automobile manufacturers including Ford, Fiat Chrysler, and General Motors. Unlike legacy automakers, Tesla does not have a dealer network. According to Tesla CEO Elon Musk, “existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars.” In light of this difference, Tesla is pursuing a differentiated selling strategy for its cars. It lets buyers book a car online, without having to visit any of the dealers. Tesla also offers a test drive to its potential customers and this also acts as a customer contact point for Tesla. Tesla has 17 stores worldwide (ACWI) to sell its cars. These stores help Tesla interact with potential customers.
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In terms of the Tesla’s sales and distribution strategy, this uses the online sales model coupled with company-owned stores to sell its cars. A totally company-owned distribution model is something totally new and is fraught with several challenges and maybe problems. The biggest challenge for a company in setting up its own distribution network is capital, or rather the lack of it. It takes a substantial amount of money to set up a distribution channel. For this very reason, vehicle manufacturers including Ford and General Motors team up with third parties to sell their vehicles. According to Tesla, the “product specialists” at its stores are not on comm ission. This means that they differ from the ordinary auto salesman, whose sole aim is to sell the vehicle. Tesla is indeed a different company with a different strategy. To put it in CEO Elon Musk’s words, “Our technology is different, our car is different, and, as a result, our stores are intentionally different.” Moreover, selling more vehicles online reduces the company’s selling costs. The physical stores serve only as showrooms for Tesla vehicles. In fact, in several states Tesla is not even allowed to sell vehicles through its stores. Tesla is facing lawsuits challenging its distribution strategy.
2.5.
SWOT Analysis
Strengths Top sell in the high performance fully electric car market The first to develop entirely electronic sports car One of the only manufacturers of advanced electric components More innovative designs
powertrain
Weakness
No strong position in market value for cars Production cost is higher than their competitors Limited revenues which leads to lack of profitability Only makes electric cars Unable to peak production on time
Opportunities
Emerging markets and expansion abroad in India and Singapore People are more concerned with the environmental issues Alternate use of battery technology such as absorbing powers from solar panels
Threats
More competition over environment friendly cars Expensive than the combustion engine cars Regulations against the manufacturing of certain models
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2.6.
The Electric Vehicles Sector
The recent ZSW report that found that the world electric car market was up to 307,000 at the end of 2014. Other stats noted there included:
China saw 54,000 electric cars registered in 2014, a growth of 120%; The US grew 69% to hit 290,000 total electric cars, about 39% of all electric cars on the road; Japan grew 45% to hit 110,000 total electric cars; The overall global electric car market saw a growth of 76%.
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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3. MACROECONOMIC OVERVIEW 3.1.
Economy
The United States is the most powerful economy in the world. Following the financial crisis of 2009, the country experienced its worst recession since the 1930s. Thanks to the Government’s large-scale budget and monetary stimulus plan, the economy has been recovering. The GDP growth rate in 2014 was 2.2%. Despite this positive result, the economy has experienced a high level of seasonal fluctuation: it declined by 2.9% in the first quarter of 2014, but rebounded in the second and third quarters, rising at a rate of 4.6% and 3.9% respectively. In 2015, growth could reach 3.4% thanks to low interest rates, vigorous job creation and a low level of household debt. In 2013, President Barack Obama tries to revive the economy, thus transferring resources to the most vulnerable sectors in order to ensure economic growth in these areas. He also launched a plan to reduce the public deficit, but an aging population will increase spending on health. It was implemented a new financial regulatory legislation, which imposed numerous fines to banks in 2014 and became the financial regulation and supervision on the part of the government's priority markets. On the other hand, measures were adopted in September 2014 to combat tax evasion by US companies. These measures should be able to recover $ 20 billion in tax revenues over ten years. Internationally, the United States faces conflicts in Ukraine and the Middle East and the economic slowdown of its main partners. The rise of the dollar penalizes exports in 2014 and the global financial crisis caused a significant increase in unemployment, which however declined to 6.1% in 2014. Calculating the discouraged workers who left the labor market, and those who are forced to accept part-time jobs, the real unemployment rate is 11.5%, against 10.8% before the crisis. However, wages do not rise sufficiently and inequality has increased since the 1980s, currently reaching its highest point. In 2014, the number of US citizens owners of a real estate reached its lowest level since 1995. This increase in household purchasing power is significant, since their spending accounts for 70% of national economic activity.
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Main Indicators
GDP (billions USD) GDP (Constant Prices, Annual % Change)
2011
2012
2013
2014
2015 (e)
15,517.93 16,163.15 16,768.05 17,416.25e 18,286.69
1.6
2.3
2.2
2.2e
3.1
49,746
51,450
53e
54,678e
57,045
General Government Balance (in % of GDP)
-7.8
-6.3
-4.8
-4.0e
-3.3
General Government Gross Debt (in % of GDP)
99.0
102.5
104.2
105.6e
105.1
Inflation Rate (%)
3.1
2.1
1.5
2.0e
2.1
Unemployment Rate (% of the Labor Force)
8.9
8.1
7.4
6.3
5.9
Current Account (billions USD)
-459.35
-460.75
-400.26
-430.94e
-483.58
Current Account (in % of GDP)
-3.0
-2.9
-2.4
-2.5e
-2.6
GDP per Capita (USD)
Source: IMF - World Economic Outlook Database - 2014
3.2.
MAIN SECTORS OF ECONOMY
No doubt that the American agricultural sector is the most important in the world; it is characterized by high productivity and the use of very modern technologies. The United States is one of the leading producers of corn, soybeans, beef and cotton. Only California produces more than 12% of total agricultural production of the country, but statistically, agriculture represents no more than 1% of US GDP and employs 1.6% of the working population. The United States is one of the most industrialized countries. The industrial sector represents 21% of GDP, where the most important sectors are the manufacture of electrical and electronic machinery, chemicals, industrial machinery and also the agri-food and automotive sectors. The country is also the world leader in the aerospace and pharmaceutical industries and the abundance of natural resources turned the US into a leading manufacturer of various minerals and allows you to maintain a diversified production. The United States is also the largest producer of liquefied natural gas, aluminium, electricity and nuclear power, and the world's third largest oil producer. The American economy is essentially based on services. The tertiary sector accounts for more than three-fourths of the GDP and empl oys 81% of the country's workforce.
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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Breakdown of Economic Activity By Sector
Agriculture Industry Services
Employment By Sector (in % of Total Employment)
1.6
16.7
81.2
Value Added (in % of GDP)
1.4
20.5
78.1
Value Added (Annual % Change)
12.1
1.8
1.7
Source: World Bank - 2014. Monetary indicators
2008 2009 2010 2011 2012
US Dollar (USD) - average annual exchange rate compared to 1 EUR
1,46 1,39 1,32 1,39 1,29
Fonte: CIA - The world factbook
Foreign Trade Indicators
2010
2011
2012
2013
2014
Imports of Goods (million USD)
1,969,184 2,265,894 2,335,537 2,331,367
-
Exports of Goods (million USD)
1,278,263 1,480,432 1,545,710 1,578,972
-
Imports of Services (million USD)
374,894
400,561
416,813
427,260
-
Exports of Services (million USD)
540,587
597,925
630,284
662,111
-
Imports of Goods and Services (Annual % Change)
12.7
5.5
2.3
1.1
-
Exports of Goods and Services (Annual % Change)
11.9
6.9
3.3
3.0
-
Imports of Goods and Services (in % of GDP)
15.8
17.3
17.1
16.5
-
Exports of Goods and Services (in % of GDP)
12.4
13.6
13.6
13.5
-
Trade Balance (million USD) Foreign Trade (in % of GDP)
-648,678 -740,644 -741,172 -702,587 28.2
30.9
30.7
30.0
-741,462 -
Source: WTO - World Trade Organization; World Bank
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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4. INDICATORS OF PERFORMANCE 4.1.
Market Performance
From the 3 graphics below we can obviously see that after 2012, that is when TESLA really started to operate and sell cars, the investor’s expectation started to increase. Therefore, even with a slightly increase in the number of shares, the price overcome that growth and market capitalization went up really quickly.
Share Price at 31st December 250,00
Number of Shares 140,00
30 000,00
120,00
25 000,00
200,00
100,00
150,00
80,00
100,00
Market Capitalization
20 000,00 15 000,00
60,00 10 000,00
40,00 50,00 -
5 000,00
20,00 -
-
4.2.
Dupont analysis
Focusing on the past TESLA’s performance, we decided to use the Dupont Analysis as a guide for our reasoning. First of all we want to explain the assumptions we took in some of on our calculations: in the ROA (return on assets) which normally is Net Income / Equity in the dupont analysis, we did EBIT / Equity because EBIT is the remuneration of the shareholders and debtholders where Net Income is just the remuneration of shareholders. That is why the ROE is not equal to ROA*Financial Leverage; another assumption was that on the calculation of the Break Even Point, we considered the SG&A (Sales, General and Administrative expenses) which include R&D (Research and Development) as the company’s fix cost; the third and last assumption was that we used COGS (cost of goods sold) instead of acquisitions in order to calculate the average payment period. After explaining this, is important to evidence that the DuPont analysis reaches 3 areas that may explain the ROE: •The operational efficiency of the company (profitability); •The degree of efficiency in the use of company assets (productivity); •Financial leverage (capital structure).
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The two best and better connected ratios with the concept of profitability are the Gross Margin and the breakeven point. For the first one, when calculated in percentage we notice that the percentage increases every year, maybe that happen due to the economies of scale effect after the increase of general sales/revenues.
Gross Margin % 30% 20% 10% 0% 2012
2013
2014
For the Break-even point, it is interesting to relate it with sales, in order to know if we reached the break point or not. By looking at the following graphic, we can definitely see that there a tendency of increase of both variables because TESLA was investing a lot and although their margin increased a lot, their fix cost increase more than that previous growth leading to negative EBITs (operational profits) in all the analysis years.
7000 6000 5000 4000 break even point 3000
sales
2000 1000 0 2010
2011
2012
2013
2014
In the productivity area, is important to focus on the cash cycle and its components. We should go through the average holding period, the average payment period and the average collection period. However, as the company was not in a stable period, having tremendous high growth rates all these ratios are not meaningful because they variate a lot and go up and down every year almost. It is not possible to infer any Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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conclusions from this area. Even so, TESLA must take into consideration that they must control this area otherwise they will have problems with their working capital. They need to extent they payment periods and decrease they collection with clients by negotiating with suppliers and clients, respectively. On the leverage/liquidity area, it is important to say that TESLA is a company in a “good situation because it has mostly equity capital and not debt capital to fund their activities. Most of the liabilities are due to taxes because TESLA had losses in the previous years and that has a distortion effect in the analysis. Therefore, they have also good performance on liquidity because they need a lot of cash to invest in R&D in order to develop their product. For example, the cash ratio is always higher than 1 and sometimes really a lot above that limit.
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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5. TESLA VALUATION 5.1.
Cash Flow Analysis
After the previous examination of the company’s background and re cent financial ratios we are now entering into the main objective of this assignment, which is the cash flow analysis. Cash flow is very important and it is the main source to elucidate about the value of the company and its liquidity. When we were evaluating this company we had to take in consideration so many aspects and inputs that we will explain later. First we started by calculating the previous year’s cash flows and only then we forecasted the following years with assumptions made by us. 5.1.1.
Previous Years Cash Flows
We decided it was better to analyse the years 2010, 2011, 2012, 2013 and 2014 for us to have a pretty large sample of the company recent past. For the calculus of the Free Cash Flow to the Firm (FCFF) the formula used was: FCFF=EBIT*(1-T)- Δ Working Capital – Net Capex
The EBIT was found by subtracting to the Revenues the Costs of goods sold including depreciations and amortizations and the Selling, general and administrative expenses which is composed mainly by research and development. The EBIT could have been calculated just by subtracting the cost of sales to the revenues but in this case we found our way just more correct because this company invests a lot in R&D. Then we needed the variation of the working capital, so we calculated the variations in the receivables and in the payables and also the variation in inventories. The first year, in this case 2010 is orphan of that because for the variations we need the values for n-1. For the Net Capex we reached the variation in fixed assets between n and n-1, just to know the investments of the company and then summed the amount of amortizations and depreciations.
2010 EBIT -Taxes on EBIT
2011
2012
2013
2014
-146,84
-251,49
-394,28
-63,63
-211,93
0,0001%
0,0002%
0,00003%
4,0704%
-11,5132%
+Δ Working Capital
-
-19,46
-11,52
93,54
316,83
-Δ Inventory -Δ Accounts Receivable
-
4,90
218,42
71,86
613,32
-
2,83 27,19
17,30 247,24
22,27 0,59
177,49 473,98
10,62
16,92
28,83
106,08
231,93
-
198,19
269,05
586,53
1 586,08
-
-413,30
-622,98
-635,03
-1 907,31
+Δ Accounts Payable
+Depreciation Costs -CAPEX FCFF
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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As we can see by the table above Tesla is still not generating profit and that is explained by the great amount of R&D included in the EBIT calculation and then by the large volume of CAPEX. We are looking to a company in an early stage of its life and that’s proved by the large variations in the inventories, accounts receivable and accounts payable. Another thing that pops to the eye is the tax rates that is explain because of the losses of the company and the tax shields. In the last year of 2014 the company “paid negative taxes”, in other terms received money instead of paying. That is explained once more by tax shields due to their losses and then the green energy credits that the government grants.
5.2. 2015
2016
Projection of Future Cash Flows 2017
2018
2019
308,11 1 042,43 2 379,68 4 814,03 -Taxes on EBIT 0% 35% 35% 35% +Δ Working Capital 216,08 -475,58 -196,59 -372,86 -Δ Inventory 465,25 564,87 782,81 1 009,76 -Δ Accounts Receivable 108,02 181,17 279,25 430,43 +Δ Accounts Payable 357,20 1 221,61 1 258,65 1 813,06 +Depreciation Costs 234,00 384,24 555,21 751,91 -CAPEX 1 903,30 2 283,96 2 740,75 3 288,90 -1 577,26 -746,56 -442,15 964,99 FCFF In this section we will explain our assumptions in the calculation of the future cash of Tesla for the next 5 years. EBIT
8 520,31 35% -724,22 1 453,55 663,47 2 841,24 980,24 3 946,67 3 295,99 flows
In order to estimate the EBIT, we had forecasted the difference between estimations of the revenues to the cost of goods sold, the depreciations and amortizations, and finally the selling general and administrative costs. We think that the future revenues will continue to increase in a fast pace in Tesla, the company is still in an developing stage of its life and it is in a sector with very high potential (electric cars sector) which is very hot topic but has a low penetration in the market. Other major factor is the recovery of the strongest economies and the awareness of the consumers for environmental issues. But for us to have a more numerical prediction we decided to use the production capacity of the future Gigafactory (500 000 cars per year), that is being build, as a reference for the grow rate of the revenues. For common sense we assumed that only 75% (375 000) of the cars that will be produced by the Gigafactory will be sold and because Tesla is delivering right now 55.000 cars the rate of grow for the revenues has to be 46,8% each year to reach the 375 000 number at 2020. The cost of sales was estimated using the ratio Cost of Sales/Revenues, we started at a value similar to the last year’s and decrease it a little year by year trying to emulate the scale economies caused by producing a lot more unities. Also by the same principle (economies of scale) the selling general and administrative expenses, which are sort of fixed costs, have a decreasing rate of grow because the fixed costs of a company should not rise at the same proportion of its sales, the economy of scale enables the company to diminish the cost per unit because the same fixed costs are being divided by more units.
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47%
47%
47%
47%
47%
Revenues
4 697,60
6 896,08
10 123,44
14 861,21
21 816,26
Cost of sales
2 959,49
4 137,65
5 770,36
7 876,44
10 908,13
63%
60%
57%
53%
50%
1 430,00
1 716,00
1 973,40
2 170,74
2 387,81
30%
20%
15%
10%
10%
Growth in revenues
Cost of Sales/Revenues SG&A Expenses
Δ SG&A Expenses
For the tax rate we assumed that in 2015 even though Tesla has positive EBIT would pay 0% due to the shields allowed by having losses in the last three years, in the following years as the company’s EBIT continues to be positive the company will pay 35%.
EBIT -Taxes on EBIT
2015 308,11 0%
2016 1 042,43 35%
2017 2 379,68 35%
2018 4 814,03 35%
2019 8 520,31 35%
In order to reach the CAPEX for the transition period between 2015 and 2019 we applied a rate of grow of 20% that seemed acceptable to us and compatible with the reports and previews we saw about Tesla’s investments such as the factory, their new model 3 and new projects that can appear. In a company so focused in innovation and technology the CAPEX has to be high and to grow from year to year because that’s what keeps the company moving and improving. With no reasons otherwise our decision was to keep the amortization rate constant and equal to the year of 2014. In our way of viewing things this is not such an important driver for the future of the company. Fixed Assets
4 269,30
6 169,01
8 354,55
10 891,54
13 857,97
CAPEX
1 903,30
2 283,96
2 740,75
3 288,90
3 946,67
234,00
384,24
555,21
751,91
980,24
9%
9%
9%
9%
9%
1 669,30
1 899,72
2 185,53
2 536,99
2 966,44
Depreciations and Amortizations Amortizate rate Net Capex
The process of reaching the variation of the working capital was somehow more complex because we introduced some variables in order to not come up with made up numbers. The average holding period in our model is constant around the value of 2014, the average collection period is growing at a rate of 5% a year to simulate the more trust put in the consumers and average payment period is growing at 10% a year to symbolize the rise of Tesla’s negotiation power with suppliers. The accounts receivable was the result from the Revenues plus the ACP/365 and the accounts payable was the result from the Cost of Sales plus the APP/365. In the same logic the Inventories were calculated by multiplying the Cost of Sales for the AHP/365. We noted that our working capital becomes negative as a result of our cash cycle, the ACP grows a lot less than the APP for the reasons mentioned above so it’s normal that the working capital variation and absolute values being negative.
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Δ Working Capital
Inventory AHP AHP/365 Accounts Receivable ACP ACP/365 Accounts Payable APP APP/365 Working Capital Δ inventories Δ accounts receivable Δ accounts payable Δ Working Capital
2015 1 418,93 175,00 0,48 334,62 26,00 0,07 1 135,15 140,00 0,38 618,41 465,25 108,02 357,20 216,08
5.3.
2016 1 983,80 175,00 0,48 515,79 27,30 0,07 2 356,76 154,00 0,42 142,83 564,87 181,17 1 221,61 -475,58
2017 2 766,61 175,00 0,48 795,04 28,67 0,08 3 615,41 169,40 0,46 -53,76 782,81 279,25 1 258,65 -196,59
2018 3 776,38 175,00 0,48 1 225,47 30,10 0,08 5 428,47 186,34 0,51 -426,62 1 009,76 430,43 1 813,06 -372,86
2019 5 229,92 175,00 0,48 1 888,94 31,60 0,09 8 269,70 204,97 0,56 -1 150,84 1 453,55 663,47 2 841,24 -724,22
Weighted Average Cost of Capital (WACC) 5.3.1.
Transition Period Beta Estimation
For the beta estimation we calculated the D/E ratio using the value of the Debt subtracted by the value of the Cash and Short-term investments. We know the right thing to do was to use the market value of debt but with the impossibility of getting it we used as a proxy the book value of debt. The next step in the formula was to use the beta unlevered of the sector, in this case we tried with the beta unlevered of the sector Auto & Truck (the sector in which Tesla is included according to their annual report) but due to the Tesla’s low value of Debt, more less 2% of it’s equity, the levered beta result was too l ow and consequently the final cost of debt (kd) was higher than the cost of equity (ke). So we decided to use the beta levered of the sector instead of the unlevered, this way in our opinion the analysis becomes more realistic and correct. After that we incorporated the tax rate of 0% considering that in the end of 2014 the company was not profitable. With all that done we finally get the value of the Beta Levered
Number of shares Price per Share Market Capitalization Debt D/E E/(D+E) D/(D+E) Beta Unlevered Auto & Trucks D/E Tax Rate Beta Levered - Bottom Up
2014 124,54 222,41 27 698,94 562,13 2,03% 98% 1,99% 1,09 2,03% 0% 1,112120762
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5.3.2.
Transition Growth WACC estimation
In order to get the WACC, the weighted average capital cost, of the company for the transition period we need to utilize the CAPM model (Capital asset pricing model) so we can reach the cost of equity (ke) then risk free asset and rating to reach the cost of debt (kd). In the CAPM model for the risk free asset we used the United States bond 30 years because it is the longest available and the USA are, by far, Tesla’s biggest market. The risk premium was the one for the United States for the same reason and the beta levered was the one calculated earlier. For the rating we used the same risk free asset, the US bonds 30 years and then we based our analysis in an unsolicited valuation made by S&P which gave Tesla a Brating grade and this grade corresponds nowadays to a 5% default spread. With cost of equity and cost of debt calculated we finally reached the WACC for the transition growth period. CAPM
Rf - US Bonds 30y Risk Premium Beta Ke
2,75% 5,75% 1,112120762 9,14%
Rating Rf - US Bonds 10y Rating Default Spread Kd
2,75% B5% 7,75%
WACC
9,12%
With the WACC already calculated we can now proceed to the calculation of the Discounted Free Cash Flows 2015 EBIT*(1-T) Depreciations Amortizations CAPEX
Δ Working Capital FCFF Kwacc Discounted FCFF
and
308,11 234,00 1 903,30 216,08 -1 577,26 9,12% -1 445,48
2016
2017
2018
2019
677,58 384,24
1 546,79 555,21
3 129,12 751,91
5 538,20 980,24
2 283,96 -475,58 -746,56 9,12% -627,02
2 740,75 -196,59 -442,15 9,12% -340,32
3 288,90 -372,86 964,99 9,12% 680,70
3 946,67 -724,22 3 295,99 9,12% 2 130,71
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5.3.3.
WACC Stable Period
For the estimation of the WACC for the stable period we need to come up with the g, the stable period growth rate and then recalculate the cost of debt and equity for the long term. To reach the g we used the formula Average ROA of the sector * EBIT Reinvestment Rate, first with the reinvestment rate of the sector Auto & Truck and then with Tesla’s historic reinvestment rate and with both of them the G was too high. We learned in classes that if for a stable period the g is higher than the economy expected rate of grow, in the long term the company would become larger than the economy, therefore we decided to use as suggestion of the professor the g of 3%. Once more we used the CAPM model with the risk free asset being the Us Bonds 30 years and the risk premium of the United States. The difference was the the beta that was now 1 because we assumed that in the long term the company’s risk meets the market risk. Using the same cost of debt calculated before we were no able to get the WACC for the stable period. Average ROA of the Sector (TTM) EBIT Reinvestment Rate - Auto and Truck Reinvestment rate - EBIT Growth Rate
7,5% 352,32% 40,49% 3%
CAPM Rf us bonds 10y beta
2,75% 1
risk premium
5,75%
Ke
8,50%
Kd
7,75%
WACC’
8,49%
Using the recently calculated G and WACC we are now able to calculate the FCFFn+1, which in this case is for 2020 and the Terminal Value. With the Terminal value we can now calculate it’s actual value, using the WACC of the growth period. Enterprise Value is now calculated by summing to the discounted value of the free cash flows the terminal value. To reach the firm value we have do deduct to the enterprise value the amount of nonoperating assets, which in Tesla’s case is the cash and other short term investments. The Equity Value is nothing more than the firm value less the value of debt of the company. Dividing the equity value for the number of shares the company possesses gives us the future value per share.
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Terminal Value Actual Value of Terminal value Enterprise Value Firm Value Equity Value Share Value
61 892,75 40 010,93 40 409,52 40 236,36 38 386,36 308,23
5.4.
Sensitivity Analysis
The sensitivity analysis is very important for a company to observe the changes that a variation on the growth rate or on the weight average cost of capital might create on the share values and in the enterprise value. Share Value WACC'
g
6,49%
6,99%
7,49%
7,99%
8,49%
8,99%
9,49%
9,99%
10,49%
2,00%
375,62
336,67
304,82
278,29
256,05
236,61
219,94
205,36
192,50
2,25%
399,54
356,02
320,80
291,72
267,52
246,50
228,58
212,97
199,26
2,50%
426,46
377,52
338,39
306,38
279,96
257,16
237,83
221,09
206,43
2,75%
456,99
401,56
357,82
322,44
293,47
268,67
247,77
229,76
214,08
3%
491,88
428,61
379,43
340,10
308,23
281,14
258,48
239,06
222,23
3,25%
532,16
459,27
403,58
359,63
324,38
294,70
270,04
249,04
230,94
3,50%
579,18
494,33
430,75
381,33
342,16
309,50
282,57
259,80
240,28
3,75%
634,77
534,80
461,56
405,59
361,82
325,70
296,19
271,41
250,31
4,00%
701,53
582,04
496,78
432,90
383,67
343,53
311,05
284,00
261,12
As we can observe the Tesla is sensitive to these changes, by keeping the actual growth rate of 3% and increasing the WACC’ on 0.5% the price of the share will decrease to 281.14, in another way a decrease in the WACC will provide an increase of the share value being it of 340.1 per share. By making the same analysis, it means by doing a variation of the growth rate in the same proportion as before we made in the WACC and by maintaining constant the WACC we can see the same variation as before. For example WACC of 8.49% and growth rate of 2.75% it will imply a decrease of the share value, it actually makes sense because if the company starts to grow a lower rate the share price that people are willing to pay will be also lower. Otherwise we can see the inverse situation when the growth rate increases, the share value will also rise.
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By looking at these variations, we can conclude that the both variations (growth rate or WACC) have the same influence (increase or decrease) in the share value, but the variation of WACC has more impact in the share value rather than the growth rate. As we can see in the table above, the worst scenario that the company could have to face is when the WACC is of 10.49% and the growth rate of 2% - the share value would be 192.5. In the best scenario, when the WACC will be 6.49% and growth rate 4%, the share value would be 701.53.
5.5.
Relative Valuation
The relative valuation, also known as multiple valuation, is another method to estimate a company’s value besides the discounted cash flow. It is probably the most used method because it is basically the comparison between a company and its peers of some financial ratios. So, it is very simple to apply. In this method the way of valuating a company bases on the idea that an asset’s value is calculated from the pricing of similar/comparable assets. This can be expanded to companies, emerging the relative valuation. It assumes there is stability and that the stock exchange markets are efficient, so that they reflect on the assets their intrinsic value. In other words, it admits that market, on average, correctly value those similar/comparable assets. In the case of TESLA, first we started to think which its main competitors are. We needed to choose companies from the same sector and with a similar size. For the first criteria is easy to pass because there are many companies in the automotive industry but for the second one it is difficult because most of the car manufactures are mature companies, with gigantic number and TESLA can be seen as a startup in this specific industry. The problem gets even bigger if we think about the product itself because most of the comparable companies also produce non electrical cars and this may distort the analysis. Even so, we choose: General Motors, Toyota, BMW, Ford Motors, Kandi Technologies Group and Volkswagen. From these 6 competitors, just Kandi is an only electrical car producer. That is the reason why we choose it besides all the other 5 well known car manufactures. The size of these companies may be not the most similar to TESLAS’ but if we had followed this criteria in a v ery strict way, we would not have found any company. The next step was to use standardized variables that make values comparable. In order to do so, we choose the following ones: PER (Price Earnings Ratio), PBV(Price Book Value), EV/EBIT (Enterprise Value / Earnings Before Interest and Taxes) and the Tobin-q. To calculate the ratios, we immersed into the internet to find some initial indicators: total debt, market capitalization (calculated by number of shares outstanding* Share price on the 31/12/2014), EBIT, Net Income, and the total equity book value.
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Company
Total Debt
Market Cap
N of Shares Out.
EBIT
Net Income
Share Price 2014
Equity BV
4880
27699
124,54
-212
-294
222,41
912
GM
141650
56205
1610
4 649
3949
34,91
35457
Toyota
258008
197004
1570
23 894
17703
125,48
139989
BMW
142025
54222
602
10 879
7016
90,07
45123
Ford Motors
183380
60450
3900
5 139
3187
15,50
24805
111
658
46,95
18 166
547
14,01
212
261020
12707
295,08
11 921
10985
43,06
105483
TESLA
Kandi Volkswagen
After having this data we begun to calculate the ratios by the following way:
PER=Price/(Earnings per Share) PBV=(Market Capitalization)/(Book value of Equity) EV/EBIT is the ratio itself Tobin-q=(Market Value of Equity+Market Value of Debt)/(Book Value of Equity+Book Value ofDebt)
Note: in the Tobin-q, we used the Book Value of Debt as a proxy of the Market Value of Debt Company
PER
PBV
EV/EBIT
Tobin-q
General Motors
14,23
1,59
42,56
1,12
Toyota
11,13
1,41
19,04
1,14
7,73
1,20
18,04
1,05
18,97
2,44
47,45
1,17
Kandi Technologies Group
1,20
3,11
0,04
2,38
Volkswagen
1,16
0,12
22,96
0,75
Average
9,07
1,64
25,02
1,27
Median
9,43
1,50
21,00
1,13
-94,20
30,38
-154
5,62
BMW Ford Motors
TESLA
After calculating these ratios to all the 6 peers (we even did it for TESLA just to have an idea of the results), we calculated the TESLA’s share value according to not only, the average but also the median of the 6 peers. Although we calculated for both (we did it just to see if there was any big difference), for us using the median is a better procedure because it reduces the effect of possible outliers. TESLA's share value according to:
PER
PBV
EV/EBIT
Tobin-q
Average
-21,41
12,03
81,75
19,79
Median
-22,26
10,95
74,92
13,38
Analysing the results, for the PER the conclusions are not applicable because TESLA's Net Income is negative and this distorts the result. A similar problem also shows up with the EV/EBIT ratio that is also not applicable because TESLA's EBIT is also negative and this may distort the final result. For the PBV and Tobin-q, the analysis is not useful for a Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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correct reasoning because the other companies are very stable and mature when compared with TESLA which is in an early stage of its life with high growth rates. Besides, competitor companies have not a very useful similar size, in order to make a reliable comparison between them and TESLA. Even so, there is not any company like TESLA with a similar size and characteristics beyond Kandi but that one is not so innovative. After all, we can see that TESLA (having on the 31/12/2014 a share price of 222,41 dollars),has a much higher share price, so we could say that TESLA is over valuated. But this may be explained by the start-up, fancy and trendy status of its electric car product and also the recent past high growth rates. In one hand, we could have stopped at this stage of analysis but we would need to take into account that we are assuming, for the PER multiple, for example, the variables that affect it such as: pay-out ratio, expected growth and risk or cost of equity; are constant. On the other hand, we can adjust for differences and try to use some components of each multiple to explain some of the differences in the multiples. For each multiple we needed to get some data of the components on internet. After having that we estimated a regression (using the Eviews8 computer program) for each multiple, in order to try to explain the differences:
GM
14,23
0,46
Risk or Cost of Equity / β (KE) (-) 1,44
Toyota
11,13
0,27
0,54
0,09
7,73
0,38
1,26
0,10
18,97
0,60
0,97
0,08
Kandi
1,20
0,00
1,81
0,18
Volkswagen
1,16
0,22
1,96
0,13
Company
BMW Ford Motors
PER
Payout (+)
Ratio
Exp Growth (+)
0,16
For the PER, although we were expecting the R-squared on relative valuation regressions to almost never be higher than 70% and it is common to see them drop to 30 or 35%, it was interesting that it was around 95% and this gives us the notion that the coefficients are meaningful. As expected, the pay-out ratio and the expected growth rate have a plus (+) signal and also the risk has a minus (-) signal. As the final results of the coefficients are so high, they may explain the differences in the multiples but the Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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expected growth rate is the one that may explain the most because it has the highest coefficient. Company
PBV
General Motors Toyota
1,59
Payout Ratio (+) 0,46
1,41
0,27
BMW
1,20
Ford Motors
Risk or Cost of Equity / β (KE) (-) 1,44
Exp Growth (+)
ROE (+)
0,16
0,07
0,54
0,09
0,09
0,38
1,26
0,10
0,13
2,44
0,60
0,97
0,08
0,05
Kandi
3,11
0,00
1,81
0,18
0,83
Volkswagen
0,12
0,22
1,96
0,13
0,86
For the PBV, we got a R-squared around 25%, as expected. So we cannot be sure whether the coefficients are meaningful or not. As expected, the pay-out ratio, the expected growth rate and ROE have a plus (+) signal and also the risk has a minus (-) signal. Of all coefficients, the expected growth rate may be again the one that explains the most differences because it has the highest coefficient. Company General Motors Toyota
42,56
Exp Growth (+) 0,16
19,04
0,09
BMW
18,04
Ford Motors Kandi Volkswagen
EV/EBIT
Capex needs (-) in million dolars 11867,00
Capital (+/-) D/E
Structure
2,52
Risk or Cost of Equity / β (KE) (-) 1,44
21788,00
1,31
0,54
0,10
6110,00
2,62
1,26
47,45
0,08
7463,00
3,03
0,97
0,04
0,18
69,00
0,17
1,81
22,96
0,13
13916,00
20,54
1,96
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For the EV/EBIT, we got a R-squared around 18% that is even lower than the last one but t is still as what we were expecting. So we cannot be 100% sure whether the coefficients are meaningful or not. As expected, the capital structure and the expected growth rate have a plus (+) signal and also the risk and capex needs have a minus (-) signal. Of all coefficients, the expected growth rate may be again the one that explains the most differences because it has the highest coefficient. However, we can infer that the capital structure of a company ( Debt/Equity ratio) in inversely related to the EV/EBIT. So, maybe the company is behind the optimal capital structure mix point and possibly if with leverage more the company, it well get more profitable with a better WACC. Company
Tobin-q
General Motors Toyota
1,12
Expected Growth Rate (+) 0,16
Capital Structure (+/-) D/E 2,52
Risk or Cost of Equity / β (KE) (-) 1,44
ROA (+)
1,14
0,09
1,31
0,54
0,04
BMW
1,05
0,10
2,62
1,26
0,04
Ford Motors
1,17
0,08
3,03
0,97
0,01
Kandi
2,38
0,18
0,17
1,81
0,71
Volkswagen
0,75
0,13
20,54
1,96
0,04
For the Tobin-q ratio, we got a very interesting R-squared a little bit above the 99%, which could lead us to good expectations on the predictive power of the regression. But, very surprisingly, the expected growth rate component got a negative coefficient in the estimation which contradicts all the previous estimations that set up that Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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0,02
component as being to most correlated one. Even so, it is not a strong negative component as is almost reaches zero. There is not any other component that stands out from all the other ones from its final result. To summarize, probably the expected growth rate is the component from all the multiples that better explains the differences between the multiples.
5.6.
Bankruptcy Risk
Companies are in bankruptcy risk when they will not be able to meet their debt obligations. This risk describes the probability that a company will become insolvent due to its incapacity to service its debt. To analyse the position of the company, we had to use the Altman Z-score test. This test is based on five financial ratios:
T1 = Net current assets / Total Assets T2 = Cumulative retained Earnings/Total Assets T3 = EBIT/Total Assets T4 = Market capitalization/Total Liabilities T5 = Sales /Total Assets
When we obtained values for these ratios is necessary to multiply them by the respective coefficients, as shown in the following formula:
Z-Score=1.2*T1+1.4*T2+3.3*T3+0.6*T4+0.999*T5 Substituting the letters for values we obtain the z-score value for the company.
2010
2011
2012
2013
2014
Current Assets
235,89
372,84
524,77
1270
3200
Current Liabilities
-85,57
-191,34
-539,11
-675,16
-2110
Total Assets
386,08
713,45
1110
2420
5850
0,47
0,31
-0,02
0,29
0,22
-414,98
-669,39
-1007,00
-1140,00
-1430,00
-1,50
-1,31
-1,27
-0,66
-0,34
- 146,84
-251,49
-394,28
- 63,63
- 211,93
-1,26
-1,16
-1,17
-0,09
-0,12
2 527,45 179,03
2 867,14 489,4
3 635,94 989,49
17 963,16 1750
27 698,94 4880
8,47
3,52
2,20
6,16
3,41
116,74
204,24
413,26
2010
3200
0,30
0,29
0,37
0,83
0,55
6,48
1,63
0,12
6,54
3,71
T1 = Net current assets / Total Assets Retained Earnings
T2 = Cumulative retained Earnings/Total Assets EBIT
T3 = EBIT/Total Assets Market Capitalization Total Liabilities
T4 = Market capitalization/Total Liabilities Sales
T5 = Sales /Total Assets
Z-Score Compass
Looking at the next table, it is possible to see that Tesla is on the “Safe” Zone because its Z-Score is equal to 3.71. Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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Z > 2.99
“Safe” Zones
1.81 < Z < 2.99
“Grey” Zones
Z < 1.81
“Distress” Zones
If we pay attention to the previous values of Tesla Z-score, we can conclude that Tesla had passed through the three zones, but in 2014, was in the “Safe” Zone. So, we can conclude that Tesla isn’t likely to go bankrupt within the next two years.
5.7.
Monte Carlo Simulation
Monte Carlo Simulation is used frequently in different fields as in finance, insurance, project management, and so on. It is a method that simulates different variables that creates uncertainty by creating interactions in the Enterprise Value and in the Share Value. The Monte Carlo simulation was performed through the Crystal Ball application for Excel. The variables that we have used to test were the FCFF for each year, growth rate, WACC and WACC’; because we think that these are the changes in these values can affect directly the enterprise value and the share value. In our nine tested parameters we have assumed that they will follow a normal distribution. So that in the next charts we will present the distributions that we got. FCFF
The FCFF’s coefficient, mean and standard deviation for each year were obtained through the Monte Carlo simulation and can be observed in the excel attach to valuation.
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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Perpetual Growth Rate
WACC
WACC’
Mean: 3%; Standard deviation: 0,3%
Mean: 9,12%; Standard Deviation: 0,91%
Mean: 8,84%; Standard Deviation: 0,85%
Based on this nine assumptions, Crystal Ball performed one million trials, in order to provide the best approximation to the real probability distribution that the value of the company and shares.
Using this assumptions and with a certainly level of 95 %, we arrive to the conclusion that Tesla value varies from 28 114,61 to 62 004,98 and the value with more probability of happening is 41 588,24 which is very close to our estimation (40 409,52).
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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Using the same assumptions and certainly level, we conclude that Tesla’s Share Value varies from 209,50 to 481,63 and the value with more probability of happening is 317,68 which is once again very closer from our calculations – 308,22. With the values that we got for the mean values of the share price and for the enterprise value we can observe that they are very similar to the values that we got during our valuation, so we can assume with some certainty that our analysis is reliable.
Filipe Sá Couto | Guilherme Baptista | Pedro Pilar | Rui Tavares
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