Based on current analyst averages, Tesla sports a Forward P/E just north of 150.0, with year-ahead EPS estimates ranging in the mid-$0.80 range. If Tesla can hit its quarterly EPS estimates—next quarter’s mark is $-0.16—it should be well on its way to reaching the long-range forecast Wall Street has set.
The sell-side expects earnings to grow by 32-33% a year over the next half-decade, above what’s expected of major competitors like Toyota Motor Corporation (ADR) (NYSE:TM) (27.3%) and General Motors Company (NYSE:GM) (15.5%). Tesla bears will cry that the automaker is much more expensive than these two peers—Toyota Motor Corporation (ADR) (NYSE:TM) trades at just 11.9 times forward earnings while General Motors Company (NYSE:GM)’s at 8.3 times forward EPS—but the fact of the matter is that momentum cantrump value in today’s current market environment, particularly with a stock (Tesla) that sports price targets of $150 a share.
In short, Tesla investors have proven that they’re willing to treat Tesla like an Amazon.com, Inc. (NASDAQ:AMZN) or a Netflix, Inc. (NASDAQ:NFLX), meaning that they’ll choose non-traditional growth metrics when evaluating the stock, rather than standard valuation multiples. In Tesla’s case, its 20,000-car goal is a key indicator to watch, and if the company can jump over this hurdle, $150 a share is more than reasonable.
Toyota Motor Corporation (ADR) (NYSE:TM) has the Prius to head up its EV fleet and General Motors Company (NYSE:GM) has the Volt, but neither of these automobile lines have the gusto to capture investors’ imagination as the Model S, and by next year, the Model X. Eventually, Tesla’s Gen III model, with its rumored $30,000 sticker price, should allow the company to compete with Toyota Motor Corporation (ADR) (NYSE:TM) and General Motors Company (NYSE:GM) even closer. By that time, the bulls should have claimed absolute victory. Check out the big-money investors in Tesla here.