StarFoxisDown!
Well-Known Member
Yes, that's the dynamic that's been played time and time again. But.........and this is what I've been saying for most of 2021, we're now getting into a stage where P/E compression has been so extreme combined with Tesla's earnings growing to scale that forces the issue.This is BAU for the financial press and analyst cabal. They keep estimates low on purpose during the quarter to provide better entry prices for the customers, then jack up those estimate in the last 3 days before earnings. Buy the rumor, sell the news. Rince, repeat. It's how they roll.
So the dynamic before was keep EPS estimates low for most of the quarter, raise the last week or so, and even when Tesla would beat, the go to was "Ok Tesla beat but it's still overvalued based on TTM P/E". They could even use the excuse of "Well the PEG is still way too high". What's changing in this dynamic is that Tesla beating or even meeting "raised" expectations has significant implication not earnings like 2 years away, but this years earnings.
So here's an interesting comparison. I'm tracking PEG's of all the mega cap stocks. Again closer PEG number is to 1 means fairly valued, the higher from 1 means more overvalued. You'd think TSLA would have the highest PEG number of the mega caps since it's widely considered more risky than say Apple or Amazon, etc..
Apple - 3.20
Amazon - 2.74
Google - .94
Netflix - 1.81
Microsoft 2.42
Nvidia - 3.22
Tesla - 2.39
So Tesa is the 3rd least overvalued stock of these comparison. But wait......the PEG is using "expected" future earnings. We know, Wall St analysts are grossly underestimating Tesla's future earnings. EPS of 10.48 for 2022 and 12.73.
In reality, Tesla is going to beat those EPS estimates by 75% for 2022 and 100% for 2023. If you take the full 5 years of EPS estimate distortion from low expectations, in reality, Tesla's PEG is under 1. Meaning it's actually the 2nd cheapest stock of the big cap stocks. So when analysts do their "last min EPS estimates", they're then forced to raise their 2022 and 2023 EPS estimates and their 5 year estimates. That will then drop TSLA's PEG lower.....even if the stock price goes up.
And just for fun comparison. GM's PEG is currently 1.62. Meaning Tesla is cheaper than GM if analysts used real EPS estimates for Tesla. I would compare Ford but all of Ford's metrics are completely thrown off by their Q4 earnings where 95% of their earnings was from their Rivian stake.
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