Free cash flow is harder to manipulate than net income. For Tesla — which invests heavily in capex and new businesses — P/FCF shows what investors actually pay for real cash generated. Reliable across all growth phases.
✅ P/S — Revenue scale signal
Price-to-Sales works well when earnings are volatile. Tesla's margins have swung widely; P/S anchors valuation to revenue, which is more stable and comparable across years.
✗ Forward P/E — Distorted for TSLA
At 150–400x trailing P/E, Tesla's earnings multiple is driven by growth expectations, not current profitability. It compresses or explodes with small EPS changes, making historical comparison unreliable.
✗ PEG — EPS instability breaks it
PEG divides P/E by earnings growth rate. When EPS turns negative or near-zero — as Tesla's did in several quarters — PEG becomes negative or undefined. Not used here.