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Calculating Tesla's PEG Ratio

|Includes: Tesla, Inc. (TSLA)

This post is to clear up any issues regarding Yahoo Finance data on Tesla's (NASDAQ:TSLA) financial metrics that is causing debate on my article on Tesla.

The source of the data is here and here. Yahoo shows a PEG ratio of around 4.5x when TSLA is priced at around $220. It also shows an 82.2% 5-year growth rate and a 363.3% one-year growth rate. After doing some calculations I find the Yahoo data to be accurate. Provided is a screen shot of my calculations and I will explain them below.

The PEG ratio of 4.51 for 2014 is accurate based on the 82.2% growth rate. If the stock price is $222.41 the P/E is 370.68 based on a 60 cent full-year EPS estimate for 2014. Then we take that 370.68 PE and divide it by 82.2 to come up with 4.51.

An 82.2% 5-year growth rate implies that the EPS in 2019 will be $12.05 calculated as follows:

$0.60 x (1.822^5)

I have then plugged in some reasonable EPS figures between 2016-2019 to get a declining annual EPS growth trend between 2015-2019. I used this as a basis to estimate a reasonable 2019 to 2020 1-year growth rate of 16.21% for an EPS of $14.

We then have enough data to deduce the 5-year EPS growth rate in 2015:

$14.00/$2.78 = 5.03x

5.03^(1/5)-1 = 38.17%

Using 38.17% 5-year growth rate against a P/E of 80 leads to a PEG Ratio of 2.1.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I have not received any compensation for this article and all opinions reflected herein are my own. The information provided herein is strictly for informational purposes only and should not be construed as a recommendation to buy or sell, or as a solicitation of an offer to buy or sell any securities. There is no guarantee that any estimate, forecast or forward looking statement presented herein will materialize and actual results may vary. Investors are encouraged to do their own research and due diligence before making any investment decision with respect to any securities discussed herein, including, but not limited to, the suitability of any transaction to their risk tolerance and investment objectives.