Actionable insights — Should you invest in Tesla today?

1. Score against fixed, pre-published bars — and let a favourite fail them

1. Fix the thresholds before you look at the company: gross margin > 40%, ROIC > 15%, ROE > 20%, net margin > 10%, capex/sales < 5%, SBC < 10% of net income, revenue growth > 5%, EPS growth > 7%.
2. Record a pass or fail for every one, in public, before forming a view.
3. Where a bar is missed, write the strongest available defence — then leave the fail in place rather than adjusting the bar.
4. Aggregate to one number so the result is comparable across companies and across time.

• Bars calibrated to the kind of business you already like — an 18% gross margin is disqualifying for software and ordinary for manufacturing, and a single fixed threshold cannot know the difference.

2. Split capex into maintenance and growth before judging capital intensity

1. Recognise that headline capex mixes two different things: keeping the existing business running, and building a new one.
2. Use depreciation and amortisation as the proxy for maintenance capex; the remainder is growth spending.
3. Re-run the ratios on maintenance capex alone — that is the cash the business genuinely cannot avoid spending.
4. If it still fails after the adjustment, the business is capital-intensive, full stop. If it passes, you have found a company whose reported cash flow understates it.

• Applying the adjustment asymmetrically — it should be run on every candidate, not only the ones you want to justify.

3. Charge stock-based compensation to the cash flow before valuing it

1. Measure SBC as a percentage of net income, and take the five-year average as well as the latest year.
2. Treat it as a real cost: subtract it from free cash flow to get the cash an owner could actually take out.
3. Publish the arithmetic so the reader can see which figure you valued.
4. Note who is being paid: high SBC transfers ownership from shareholders to employees every year, regardless of the share price.

• Buyback programmes that only offset dilution — those are a cost of employment being reported as a return of capital.

4. Invert: ask what growth the price already requires

1. Rather than forecasting, solve for the free-cash-flow growth rate implied by today's market value over your horizon.
2. Show the starting cash-flow base and every adjustment made to it, so the output can be checked.
3. Compare the implied rate against what any comparable business has actually achieved at similar scale.
4. State the verdict as a probability judgement about that number, not about the company.

• The terminal assumptions hidden inside the number — a reverse DCF's implied growth is very sensitive to the discount rate and terminal multiple, neither of which is published here.

5. Publish the expected-return equation with every input visible

1. Write the model out: expected return = EPS growth + dividend yield ± multiple change.
2. State each assumption and label it — here, 15% EPS growth for ten years is explicitly flagged as "being conservative," i.e. generous to the company.
3. Show the calculation itself, not just the answer.
4. Read the result for what it reveals: if a decade of 15% growth still yields 6.5%, the multiple, not the business, is the problem.

• The exit multiple doing the damage or the rescue — at these levels the assumed terminal PE matters far more than the growth rate.

6. Test a cost advantage by asking who owns the input

1. Identify the component that actually drives the cost advantage.
2. Ask whether the company makes it or buys it, and whether the supplier sells the same thing to competitors.
3. A rented advantage disappears the moment a rival places an order; only an owned one is a moat.
4. Check the margin data against the claim — a real cost advantage shows up as a higher gross margin than peers.

• Moat claims stated in engineering terms (single-piece casting, ecosystem, data) with no margin evidence behind them.

7. Size the optionality against the market capitalisation, not against the narrative

1. For each future business embedded in the story, find a published estimate of the total market it could serve.
2. Compare that total addressable market against the company's current market value — not against its revenue.
3. Ask who is already operating in that market commercially, and how far ahead they are.
4. If the entire future market is smaller than a fraction of today's valuation, the option is not carrying the price.

• Third-party market forecasts treated as facts — Grand View Research and McKinsey numbers are inputs to a case, not evidence for it.

8. Make the rejection relative, and name what you would buy instead

1. End the analysis with an explicit decision, not a summary of considerations.
2. Frame it against the current opportunity set: the question is never "is this good?" but "is this the best use of the next dollar?"
3. Keep the completed worksheet — if the price falls far enough, the analysis is already done.
4. Publish the rejections as well as the purchases; a framework that only ever says yes is not a framework.

• A rejection with no re-entry price — unlike the Cintas (25x forward) or FICO passes, no level is named at which this analysis would change.