It hasn't been a great evening session for Tesla investors, who have watched their shares sink by -1.1% to a price of $237.01. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
The Market May Be Overvaluing Tesla's Earnings and Assets:
Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Tesla has a trailing 12 month P/E ratio of 76.7 and a P/B ratio of 14.09.
Tesla's PEG ratio is 20.97, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $21,461 | $24,578 | $31,536 | $53,823 | $81,462 | $95,924 |
| Revenue Growth | n/a | 14.52% | 28.31% | 70.67% | 51.35% | 17.75% |
| Operating Margins | -2% | 0% | 6% | 12% | 17% | 12% |
| Net Margins | 0% | 0% | 3% | 10% | 15% | 11% |
| Net Income (MM) | -$87 | $87 | $862 | $5,644 | $12,587 | $10,795 |
| Net Interest Expense (MM) | $663 | $685 | $748 | $371 | $191 | $275 |
| Depreciation & Amort. (MM) | $1,110 | $1,370 | $1,570 | $1,910 | $2,420 | $3,106 |
| Earnings Per Share | -$0.1 | $0.1 | $0.27 | $1.67 | $3.62 | $3.08 |
| Free Cash Flow (MM) | -$3 | $1,078 | $2,786 | $5,015 | $7,566 | $3,714 |
| Capital Expenditures (MM) | $2,101 | $1,327 | $3,157 | $6,482 | $7,158 | $8,450 |
| Current Ratio | 0.83 | 1.13 | 1.88 | 1.38 | 1.53 | 1.69 |
| Total Debt (MM) | $13,992 | $14,501 | $13,112 | $9,861 | $7,511 | $9,024 |
| Net Debt / EBITDA | 14.27 | 6.33 | -1.76 | -0.91 | -0.54 | -0.46 |
Tesla has growing revenues and increasing reinvestment in the business and exceptional EPS growth. Additionally, the company's financial statements display low leverage and irregular cash flows. Furthermore, Tesla has average net margins with a positive growth rate.
