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- 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 (Diluted).
- The market capitalization sometimes referred as Marketcap, is the value of a publicly listed company.
- If the forward P/E ratio is higher than the current P/E ratio, it indicates decreased expected earnings.
- At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.
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The Price/Earnings ratio measures the relationship between a company’s stock price and its earnings per share. A low but positive P/E ratio stands for a company that is generating high earnings compared to its current valuation and might be undervalued. A company with a high negative (near 0) P/E ratio stands for a company that is generating heavy losses compared to its current valuation. It is the most commonly used metric for determining a company’s value relative to its earnings. In this example, we are using the actual earnings (EPS) for the trailing twelve months (or TTM). A stock with a P/E ratio of 20, for example, is said to be trading at 20 times its trailing twelve months earnings.
Google Cloud continues to be Alphabet’s growth leader
Darling technology stocks are making new highs and are busy overtaking each other in the four-comma club, while Tesla has fallen to the 11th spot in terms of market capitalization. Not many may recall this, but Tesla breached the $1 trillion level in 2021 and has since lost 40% of its value. Competition is heating up, and while total deliveries and revenue are still going up, they come at the expense of margin.
Cash Flow
There are at least three kinds of PE Ratios used by different investors. They are Trailing Twelve Month PE Ratio or PE Ratio (TTM), Forward PE Ratio, or PE Ratio without NRI. A new PE Ratio based on inflation-adjusted normalized PE Ratio is called Shiller PE Ratio, after Yale professor Robert Shiller. The Zacks Equity Research reports, or ZER for short, are our in-house, independently produced research reports. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
What is Tesla’s PE ratio?
The debt-to-equity (D/E) ratio is a key indicator of a company’s financial health and its reliance on debt financing. Access 4000+ stock metrics covering valuations, financials, risk, returns and more. Similar to the PE Ratio without NRI or PS Ratio or Price-to-Operating-Cash-Flow or Price-to-Free-Cash-Flow , the PE Ratio measures the valuation based on the earning power of the company. This is where it is different from the PB Ratio , which measures the valuation based on the company’s balance sheet. The company has $29.09 billion in cash and $5.23 billion in debt, giving a net cash position of $23.86 billion or $7.49 per share. In the last 12 months, Tesla had revenue of $96.77 billion and earned $15.00 billion in profits.
Also for stocks with the same PE Ratio, the one with faster growth business is more attractive. The Forward Price to Earnings (PE) Ratio is similar to the price to earnings ratio. The regular P/E ratio is a current stock price over its earnings per share. The forward P/E ratio is a current stock’s price over its “predicted” earnings per share. If the forward P/E ratio is higher than the current P/E ratio, it indicates decreased expected earnings.
In the fourth quarter of 2023 (ended Dec. 31), Google Search delivered a record-high $48 billion in revenue, which equaled a 12.7% year-over-year increase. It was the fastest pace of growth since mid-2022, right before interest rates shot higher. The current PE ratio of TSLA is 86% lower than the 4-year historical average. Researching stocks has never been so easy or insightful as with the ZER Analyst and Snapshot reports. As an investor, you want to buy stocks with the highest probability of success.
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 (Diluted). Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company’s financial health and risk profile, aiding in informed decision-making. Because the PE Ratio measures how long it takes to earn back the price you pay, the PE Ratio can be applied to the stocks across different industries. That is why it is the one of the most important and widely used indicators for the valuation of stocks. To compare stocks with different growth rates, Peter Lynch invented a ratio called PEG Ratio. He thinks a company with a PE Ratio equal to its growth rate is fairly valued.
While Musk has often been faulted for being too optimistic, I’d rather have a leader who is overly optimistic and breaks the barriers of possibilities as a result. This helps Google Cloud customers tesla pe ratio accelerate the development of AI applications for their own purposes. Vertex AI saw an impressive sixfold increase in activity in the second half of 2023 compared to the six months prior.
TSLA Ratios
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. Investors need to be aware that the PE Ratio can be misleading a lot of times, especially when the underlying business is cyclical and unpredictable. https://business-accounting.net/ As Peter Lynch pointed out, cyclical businesses have higher profit margins at the peaks of the business cycles. It is usually a bad idea to buy a cyclical business when the PE Ratio is low. A better ratio to identify the time to buy a cyclical businesses is the PS Ratio .
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. 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. Gross margin is 18.25%, with operating and profit margins of 9.19% and 15.50%.
I’m not suggesting it will soar that high, but the company’s accelerating growth and record financial results warrant a valuation more in line with the Nasdaq-100, at the very least. The PE Ratio can be viewed as the number of years it takes for the company to earn back the price you pay for the stock. For example, if a company earns $2 a share per year, and the stock is traded at $30, the PE Ratio is 15. Therefore it takes 15 years for the company to earn back the $30 you paid for its stock, assuming the earnings stays constant over the next 15 years. The Price to Earnings Ratio (PE Ratio) is calculated by taking the stock price / EPS Diluted (TTM).