Tesla Inc (TSLA)

Conclusion

Tesla designs, manufactures and sells electric vehicles, and it also builds energy generation and storage systems through its Automotive and Energy segments. At 358.22 USD on 6 November 2026, the market capitalisation is 1.42 trillion USD.

The verdict is overvalued. The price-to-earnings ratio of 438.10 compares with a historical median of 181.26, the enterprise value to EBITDA of 123.11 with 93.64, and the price to free cash flow of 428.69 with 236.27. The fair value band runs from 157.95 to 236.92 USD, with a midpoint of 197.44 USD and a margin of safety of -44.9% at the current price. No DCF value per share and no reverse DCF growth figure are available in the data. Delivered growth is revenue compound growth of 5.19% over three years and 24.63% over five years, while earnings per share fell at a compound rate of 33.29% over three years.

The strongest numbers are the net cash position (net debt to EBITDA of -2.57), the Altman Z-score of 13.90 and interest coverage of 13.1x. The weakest are the return on invested capital of 5.53% against a WACC of 13.47%, the operating margin of 3.35% against a median of 5.46%, and free cash flow after stock-based compensation of -997 million USD over the trailing twelve months.

Financial health

Financial strength is green, held up by a net cash position, strong interest coverage and good liquidity. The current ratio is 1.74 and the quick ratio 1.24. Net debt to EBITDA is -2.57, which means net cash, and debt to equity is 0.18. Interest coverage is 13.1x on a trailing basis. The Altman Z-score is 13.90, in the safe zone. The Altman model was designed for manufacturers, and Tesla is an auto manufacturer, so the reading applies. Insolvency risk: low, about 0.07% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is red, pulled down by weak free cash flow conversion over five years and by negative cash flow after stock compensation. Free cash flow conversion is 102.2% on a trailing basis but only 57.1% over five years. The accrual ratio is -8.43%. Stock-based compensation is 4.15% of revenue, and free cash flow after it is -997 million USD. The share count has risen at a compound rate of 1.66% over five years, so there have been no net buybacks. The Piotroski score is 5 out of 9. The Beneish M-score is not available. Over the last eight quarters, earnings beat expectations three times and missed four times, with an average surprise of 7.34%. Current-year estimates were revised down 2.23% over 90 days, with 8 upward and 14 downward revisions in the last 30 days.

Profitability

Profitability is red. The gross margin is 19.29% against a median of 18.87%, and the net margin is 3.12% against a median of 3.14%. The operating margin is 3.35% against a median of 5.46%, below its own history. Return on invested capital is 5.53% against a WACC of 13.47%, a ROIC minus WACC value of -7.94%, so the company currently earns less on its capital than that capital costs. The five-year median ROIC is 17.16%. The DuPont split shows a net margin of 4.0%, an asset turnover of 0.69 and an equity multiplier of 1.68. Return on equity of 3.62% is therefore not inflated by leverage, and the weakness comes from thin margins and low asset turnover.

Growth

Growth is green. Revenue compound growth is 5.19% over three years, 24.63% over five years and 37.09% over ten years. Revenue grew in 9 of the 10 comparable years. Earnings per share compound at -33.29% over three years but at 37.11% over five years, so the recent decline is the key point. Free cash flow per share compounds at -6.74% over three years and 16.22% over five years. For the next year, the consensus earnings growth estimate is 24.19%, but estimates have been revised down over the last 90 days.

Valuation

Valuation is red. The price-to-earnings ratio is 438.10 against a historical median of 181.26, a premium of 141.7%. The enterprise value to EBITDA of 123.11 compares with 93.64, a premium of 31.5%. The price to free cash flow of 428.69 compares with 236.27, a premium of 81.4%, and the price to sales of 13.67 with 7.13, a premium of 91.7%. The price to book of 15.86 is close to its median of 15.83. The fair value band runs from 157.95 to 236.92 USD with a midpoint of 197.44 USD, and the margin of safety is -44.9%. The fair value from historical multiples is 197.44 USD. The DCF gives no per-share value in this data, and the reverse DCF growth figure is not available. Free cash flow is negative, which the data notes. The fair value rests on fixed assumptions, a 5% equity risk premium and capped growth, so it is an order of magnitude, not a price target. Tesla pays no dividend, the forward yield is 0%, and the free cash flow yield is 0.23%.

Risks

Several weak numbers carry specific risks. A return on invested capital of 5.53% below a WACC of 13.47% means growth can destroy value unless returns improve. Negative free cash flow after stock compensation of -997 million USD means the business relies on its balance sheet or on dilution, and the share count has already risen. A falling operating margin, at 3.35% against 5.46%, leaves little room for error if demand softens. Downward estimate revisions, with 14 downward and 8 upward for the current year in 30 days, point to pressure on earnings forecasts. The DCF value, the reverse DCF growth and the Beneish M-score are not available. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot test refinancing needs or the contribution of each business line.