Tesla, Inc. (NASDAQ: TSLA) shares concluded 2023 with a rise of approximately 101%, even though they struggled in the latter part of the year. Despite the previous year’s increase, fund manager Gary Black mentioned in a recent post that the electric vehicle manufacturer’s stock is reasonably priced.
Tesla’s worth remained impartial compared to other members of the “Magnificent 7” stocks, as mentioned by Black in a post on X, formerly known as Twitter. The term “Mag 7” refers to the prominent seven mega-cap tech stocks, which include Tesla, Nvidia Corp. (NASDAQ: NVDA), Microsoft Corp. (NASDAQ: MSFT), Apple, Inc. (NASDAQ: TSLA), Meta Platforms, Inc. (NASDAQ: META), Amazon, Inc. (NASDAQ: AMNZ), and Alphabet, Inc.
The analyst highlighted that Tesla’s price-earnings growth ratio (PEG) stands at 1.9 times, exceeding the group’s average PEG of 1.7 times. Nvidia boasts the most economical PEG ratio at 0.9, while Apple commands the highest with a PEG ratio of 2.7.
The PEG ratio is derived by dividing a company’s P/E ratio by the anticipated earnings growth over a specified future period, typically one to three years. A ratio below one indicates undervaluation, while a ratio above one signifies overvaluation.
Black emphasized that Tesla exhibits the highest expected five-year adjusted earnings per share growth at a compounded annual rate of 33%. Additionally, it holds the highest 2024 adjusted P/E, standing at 62 times.
The significance lies in Tesla navigating a transitional phase as investors anticipate the launch of a sub-$30,000 electric vehicle, anticipated to ignite volume growth. The recent introduction of the Cybertruck on Nov. 30, 2023, is also expected to generate a “halo effect.”
With the electric vehicle market experiencing sluggish expansion and heightened competitive pressures, Tesla’s fundamental performance may need help to gain momentum. Nonetheless, optimistic analysts envision the Tesla growth narrative remaining robust. They foresee a boost in the company’s sum-of-the-parts valuation through the monetization of its Supercharger network, potential commercialization of its fully self-driving software in advanced beta testing, the Tesla bot, and robotaxi services.
According to Benzinga Pro data, Tesla concluded Friday’s session with a 0.18% decline, reaching $237.49. For more insights into the future of mobility, you can follow this link to Benzinga’s coverage.
Looking ahead, an analyst anticipates a 33% rally in Tesla stock, expecting the electric vehicle giant’s growth to reaccelerate in 2024 due to a “significant competitive advantage.”
There is another problem with Tesla products Some say that Tesla’s cybertruck is creating some problems that make the driver’s experience a little different.
