A better ratio to identify the time to buy a cyclical businesses is the PS Ratio . Tesla, Inc. has a trailing-twelve-months P/E of 50.97X compared to the Automotive – Domestic industry’s P/E of 10.62X. The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.

Tesla has a negative price-to-earnings ratio because it has reported significant losses in the last 10 years. The PE ratio, which divides a company’s market value by its projected earnings, is a crucial valuation measure that investors and analysts use to compare a stock price with its actual earnings. The Price to Earnings Ratio is calculated by taking the stock price / EPS Diluted . This metric is considered a valuation metric that confirms whether the earnings of a company justifies the stock price.

TSLA Share Price Performance

I prefer to buy long term winners when they have short term problems. You may call them falling knives, I call them being on sale. Most of what I buy is with the mindset of never selling, or at the very least, holding several years.

• In earlier years, financial solvency was also an issue, but the bears know that today they have a solid balance sheet.
• Please do you own due diligence regarding any security directly or indirectly mentioned in this article.
• With a macro foundation , we offer actionable investment strategies that allow clients to make money in any market environment.
• However once he does deliver, albeit very late, the results are often impressive.
• Prior to that, for 6 years I ran an online business in the credit card space.
• It is usually a bad idea to buy a cyclical business when the PE Ratio is low.

TSLA’s valuation metrics are weak at its current price due to a overvalued PEG ratio despite strong growth. TSLA’s PE and PEG are worse than the market average resulting in a below average valuation score. For those reasons, I don’t know what the future holds for the company. What I do know though is that as a value investor, the stock is finally looking interesting. It has grown to become a company with real revenue and earnings that one can derive a valuation from.

Stock Price Statistics

The industry with the worst average Zacks Rank would place in the bottom 1%. Tesla’s other bets are not being valued as wildly and as such, I don’t mind paying some premium knowing that given the mad genius of Musk, they will probably impress us, eventually. I mean let’s be blunt here, he’s the master of overpromising and underdelivering.

P/E by then should be corrected to less than 30 where value investors will come in and hold it steady and momentum investors will take it forward later. The bears are 100% right in that today, yes, the vast majority of Tesla’s revenue comes from product sales. No, I don’t mean solar roofs or backup batteries for your home. So yes, based on sales, Tesla is correctly categorized as being an automaker. Provide specific products and services to you, such as portfolio management or data aggregation.

Markets

TSLA has a better value than 81% of stocks based on these valuation analytics. Investors primarily focused on buy-and-hold strategies will find the valuation ranking relevant to their goals when making investment decisions. Additionally, the automotive segment is also comprised of services and other, which includes non-warranty after-sales vehicle… At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.52% per year.

There isn’t necesarily an optimum PE ratio, since different industries will have different ranges of PE Ratios. Because of this, PE Ratio is great to evaluate from a relative standpoint with other similar companies. pe ratio of tesla The PE Ratio, or Price-to-Earnings ratio, or P/E Ratio, is a financial ratio used to compare a company’s market price to its Earnings per Share . It is the most widely used ratio in the valuation of stocks.

Related Articles

That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style. Data by YCharts When you factor in the debt and consider enterprise value to earnings, you realize Tesla is valued at least slightly closer to its peers than their PE values alone would suggest. The primary bearish thesis for Tesla has always been that it is an automaker and should be valued as such. In earlier years, financial solvency was also an issue, but the bears know that today they have a solid balance sheet. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index quotes are real-time. To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Verify your identity, personalize the content you receive, or create and administer your account. We’d like to share more about how we work and what drives our day-to-day business. Tesla stock is reversing deeper and deeper into the mud slide as investors contemplate back-to-back recalls and a distracted CEO. Tesla’s earnings beat has shown that despite rising electricity prices and lowered demand – EVs are still in.