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Price-to-Earnings (P/E)
For informational and educational purposes only • Not investment advice.
Tesla
Electric vehicles, energy
Estimated Fair Value
Stock price: $382.70
Fair value below stock price
This model estimates a company's fair value by applying its historical Price-to-Earnings multiple to Earnings per Share.
Historical P/E Ratios
This chart shows the company's historical Price-to-Earnings ratio by year.
Key Valuation Metrics
Notes
What is Price-to-Earnings (P/E) Valuation?
Price-to-Earnings (P/E) Valuation estimates a company's Fair Value based on its earnings and the P/E multiple applied to those earnings.
The P/E ratio compares a company's share price with its Earnings per Share (EPS). It shows how the market values the company in relation to the earnings it generates.
Historical P/E ratios show the valuation multiples at which the company has traded in the past. They can be used as a reference for estimating Fair Value from the company's Earnings per Share.
P/E Valuation is most useful for profitable companies with relatively stable earnings and a meaningful historical P/E range.
How the P/E Model Works
The Price-to-Earnings model estimates fair value by calculating the company's historical valuation multiple, selecting a valuation P/E, and applying it to Earnings per Share.
P/E Formula
Key Model Assumptions
• The current EPS input is based on trailing twelve-month (TTM) earnings when four consecutive quarterly periods are available; otherwise, the latest annual EPS is used.
• Historical P/E ratios are calculated only for years with valid positive earnings.
• The 10 most recent valid historical P/E ratios are used to estimate the company's typical valuation multiple.
• The median historical P/E forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the median historical P/E.
• Historical valuation multiples may not remain representative if the company's growth, risk or profitability changes materially.
Step 1 — Calculate Historical P/E Ratios
Historical Median P/E = 207.04x
The model calculates historical P/E ratios from historical share prices and Earnings per Share. The median of the 10 most recent valid P/E ratios is then used as Tesla's historical valuation benchmark. The resulting median P/E is 207.04x.
Step 2 — Select the Valuation Multiple
The selected scenario adjusts the historical median P/E to determine the valuation multiple used to estimate Fair Value. Under the base scenario, the model uses a P/E multiple of 207.04x.
Step 3 — Estimate Fair Value per Share
The selected P/E scenario is applied to Tesla's Earnings per Share of $1.08 to estimate a Fair Value per Share of $223.60.
Step 4 — Compare With the Current Market Valuation
Current P/E shows the multiple currently assigned to Tesla's earnings. The stock currently trades at 354.35x compared with a historical median of 207.04x.
The Valuation Gap compares the estimated Fair Value with the current stock price of $382.70. Under the current assumptions, the Valuation Gap is -41.6%.