| TESLA |
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| SUMMARY OUTPUT |
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| Regression Statistics |
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| Multiple R |
0.231825432 |
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| R Square |
0.053743031 |
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| Adjusted R Square |
0.037428255 |
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| Standard Error |
0.164962621 |
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| Observations |
60 |
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| ANOVA |
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df |
SS |
MS |
F |
Significance F |
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| Regression |
1 |
0.089642128 |
0.089642 |
3.294132 |
0.074699515 |
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| Residual |
58 |
1.578334656 |
0.027213 |
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| Total |
59 |
1.667976783 |
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Coefficients |
Standard Error |
t Stat |
P-value |
Lower 95% |
Upper 95% |
Lower 95.0% |
Upper 95.0% |
| Intercept |
0.029619346 |
0.022746497 |
1.30215 |
0.198013 |
-0.015912715 |
0.075151 |
-0.01591272 |
0.075151406 |
| X Variable 1 |
1.309325232 |
0.721401447 |
1.814975 |
0.0747 |
-0.134716657 |
2.753367 |
-0.13471666 |
2.753367121 |
Using above given linear regression summary output, write out the FF3F model equation for Tesla. Using the following factor information make a forecast of Tesla's next year's returns: Market excess return (8.01% EAR), SMB (1.97% EAR), HML (9.93% EAR), Risk-free rate (0.2% EAR).
Given the analysts' projected return for Tesla for FY 2017 of -8.7% EAR, determine whether the stock is over or undervalued in comparison to the FF3F's projection. The analysts' current recommendation for Tesla is to "hold" the stock. Do you agree with this recommendation?