Tesla's (TSLA) PE ratio (Price-to-Earnings ratio) as of December 23, 2024, is 117.97. This ratio is a key valuation metric that reflects how the market values Tesla's earnings.
Understanding Tesla's PE Ratio Calculation
The PE ratio is determined by dividing a company's current share price by its earnings per share (EPS) over the trailing twelve months (TTM). It offers insight into investor expectations for future growth and the company's current valuation.
For Tesla, the PE ratio on December 23, 2024, is derived from the following financial data:
| Metric | Value | Date/Period |
|---|---|---|
| Share Price | $430.60 | December 23, 2024 |
| Earnings per Share (Diluted, TTM) | $3.65 | Trailing Twelve Months ended Sep. 2024 |
| PE Ratio (TTM) | 117.97 | December 23, 2024 |
Calculation Breakdown:
The calculation for the PE ratio is straightforward:
PE Ratio = Share Price / Earnings per Share (TTM)
Using the provided figures for Tesla:
PE Ratio = $430.60 / $3.65 ≈ 117.97
This particular PE ratio specifically reflects Tesla's financial performance up to September 2024, paired with its market price on December 23, 2024.
Significance of Tesla's PE Ratio
A high PE ratio, like Tesla's 117.97, often indicates that investors have strong expectations for significant future earnings growth. Several factors contribute to why Tesla commands a higher PE ratio compared to many traditional industrial companies:
- Growth Expectations: Investors anticipate substantial expansion in various segments, including electric vehicles, energy storage, artificial intelligence, and autonomous driving technology.
- Market Leadership and Innovation: Tesla is perceived as a leader and innovator in its core markets, which can justify a premium valuation.
- Disruptive Potential: The company is often viewed as a technology and clean energy innovator rather than solely an automotive manufacturer, leading to different valuation benchmarks.
Analyzing the PE ratio in conjunction with other financial metrics and industry benchmarks provides a more comprehensive view of the company's valuation.
