Tesla earnings growth justifies its valuation, here’s the data

[lyn244]

@kerrym1971 P/E only works for companies with similar growth rates

PEG adjusts for the growth rate and allows you to compare. All it says is basically a company growing earnings with 50% earnings growth that trades at 50 P/E is as fairly valued as a company with 10% earnings growth rate and 10 P/E. PEG just illustrates that higher growth rates justify higher P/E multiples and that if you have a high P/E multiple on a stock, you also need to have a high growth rate. The whole point of the ratio is to allow for different growth rates in the comparison

 

[resjudicata]

@lyn244 Yet Ford has a PEG of 1,9x while Tesla is at 6,74

Remember its calcualted annually not for 1 quarter…

Not saying Ford is a good investment, but Tesla is definitely overvalued…

 

[lyn244]

@resjudicata Tesla’s PEG is not 6.74, it’s 1.47 as demonstrated in my post. I’m not doing one quarter, I’m doing 1 year, 2022

 

[resjudicata]

@lyn244 The expected earnings growth is 25,3% per year for the next 3 years, which will give a PEG of 6,74.

 

[lyn244]

@resjudicata Tesla will grow earnings much faster than 25% over the next 3 years. Try 60-70%

 

[resjudicata]

@lyn244 Good DD, Siri remind me to buy puts on $TSLA

 

[lyn244]

@resjudicata I’ll sell them to you because I like money

 

[grh]

@lyn244 Regardless of what Tesla's current financial numbers are, I remain invested in it simply because I don't think there's any other company out there quite like it in terms of just how far they push the limits of applied technology.

 

[phlorence]

@grh That's a pretty ambiguous reason to buy a stock, "regardless of their financial numbers."

 

[grh]

@phlorence I consider the five TSLA shares I have to be a speculative holding, though unlike my other speculative holdings this one has actually done quite well.