Over the previous yr, a number of the wind has been taken out of the sails of Tesla (NASDAQ:TSLA) inventory. After a number of years of explosive share worth features, the worth is flat on 12-month foundation. But with latest occasions together with the a lot anticipated robotaxi reveal, I’m curious to see what the consultants assume concerning progress prospects for the approaching couple of years.
Trying on the numbers
To get a really feel for the inventory’s progress potential, I can take a look at the forecast earnings per share. Sometimes, the share worth trades at a a number of of the newest earnings. For the time being, the Tesla price-to-earnings (P/E) ratio is 62. So though this fluctuates over time, I can take a look at the EPS forecast after which can estimate the share worth.
EPS for 2023 had been $3.12. This was made public in early 2024. So the 2024 determine will come out in early 2025 and so forth. From a gaggle of 36 analysts, the 2024 EPS determine is estimated at $2.28. For 2025 this jumps to $3.03.
Based mostly on the $3.12 from final yr, I can see that the expansion forecast is definitely detrimental for this present yr, earlier than rallying subsequent yr. To some extent this is sensible. The enterprise supply numbers for Q1 and Q2 had been down yr on yr, the primary time this has occurred in virtually a decade. Q3 figures had been higher, however there’s some concern that opponents are catching as much as Tesla and consuming away at market share.
From earnings to share worth
If I assumed that the P/E ratio stayed the identical, it may point out a share worth for subsequent yr of $141. This could be a pointy fall from the present worth of $220. Nevertheless, I’ve to take this forecast with a pinch of salt.
Forecasts don’t equate to details. Tesla may carry out effectively to complete this yr, inflicting expectations for earnings to rise. Additional, making an attempt to foretell firm efficiency in 2025 and past is extremely tough to get appropriate proper now.
On Wednesday (23 October) we get the Q3 monetary outcomes, which I believe can be a key occasion for the inventory path via to the top of the yr. Not solely will this affect earnings, but it surely might be a constructive driver for sentiment too. Put one other method, an upbeat report may spark a rally even when it’s not particularly associated to earnings. Chatter round new manufacturing services, product launches, partnerships or different elements may affect issues.
Retaining an in depth eye
On paper, the present progress forecast for Tesla shares doesn’t look nice. Nevertheless, I’m nonetheless going to maintain the inventory on my watchlist, particularly with the earnings report arising later this week. Ought to expectations materially change within the coming months, it’s undoubtedly a inventory I’d take into account proudly owning sooner or later.
