The Dynasty Investor: TE Value

Photo: Dale Zanine, USA Today Sports

To recap the process, the way we measure value in the Dynasty Investor is by looking at a player's KeepTradeCut (KTC) vs. his fantasy point per game (PPG) in a ratio called the price-to-earnings (P/E) ratio. P/E = KTC / PPG / 10. Then, you compare that player's P/E ratio to a like-for-like cluster of players from an age, production, and potential perspective. Players in the same cluster should be valued similarly in the market on a P/E basis. If they aren't, then an arbitrage opportunity exists to create value.

This article will use these principles to find value in the tight end position.

Key Points Up Front

• BUY Kyle Pitts; he is our highest conviction TE buy.
• BUY Noah Fant.
• We are upgrading Greg Dulcich to BUY

TE Clusters

We will now look at the fantasy tight end landscape broken up into clusters of similar players by age and PPG. These are NOT rankings; they are groupings of like-for-like players. Please take a look at the chart below. This chart is an exciting way to look at the tight end group. The clusters are graphed with increasing estimated PPG on the horizontal axis and decreasing age (youngest on top) on the vertical axis. The players are divided into clusters by the gray dashed lines by PPGs of 11+, 8-11, 5-8, and by age: <25, 25-28, and 29+. Visually, these clusters are grouped by color. Also, the size of the bubble represents each player's KTC, so the bigger the bubble, the higher the KTC. Below, we will break apart each cluster to look for value amongst the like-for-like players — Big shout out to @NFL_Billy_Jones for helping me put this chart together.

Also, look at this chart, which graphs KTC vs. estimated PPG. We added a best-fit line. I think this is a fascinating chart, and it might indicate that players above the line are maybe a little expensive on a KTC vs. PPG basis, and those below the line are a little cheap. It's an exciting way to look at it, but we will explore these valuations in the cluster tables below.

TE Cluster | Age <25 | 11+ PPG

Cluster Trading notes:

Look, we are very high on Kyle Pitts at the Dynasty Investor. We're not going to repeat our case over and over again, so please check out the first Footballguys Dynasty Investor article here for a breakdown of our thoughts. Also, check out this clip from FBG's Dave Kluge on a 2023 "Kyle Pitts Breakout SZN."

Our @DaveKluge makes a case for Kyle Pitts to break out this year in fantasy football.

Are you in or out on the Year 3 tight end?

🔗: https://t.co/SWnGBDMshl pic.twitter.com/0q4nzfmDUV

— Footballguys | Fantasy Football (@Footballguys) August 22, 2023

We see a 15% upside to Pitts' current KTC using 11.5 estimated PPG and a mid-50s target P/E. We believe there is a significant upside to the 11.5 PPG estimated in 2023 and beyond, which will help Pitts work into his current pricey valuation.

One new point we'll mention on Pitts is that even though he has played two seasons in the NFL, he is still one of the youngest starting TEs, which is very apparent in the cluster chart above. He's three months older than rookie Sam LaPorta and nine months older than rookie Michael Mayer, and that's it. He's a whole year younger than rookie Dalton Kincaid, younger than rookie Luke Musgrave, and younger than the other listed starting TEs in the league. This is Dynasty, and age matters. Buy Kyle Pitts.

Cluster Charting:

The chart call is Pitts returning to just above his average KTC since 2021. There's nothing heroic here, just your run-of-the-mill reversion to the mean. The setup looks good as his KTC chart passes through his 150-day moving average and the minus one standard deviation line on a path back to ~6400 KTC.

TE Cluster | Age 29+ | 11+ PPG

Cluster Trading notes:

Travis Kelce scores more points than any TE in fantasy football and has done so for many years. He is one of the most differentiated players vs. his position in all of fantasy. He is 'irreplaceable.' Kelce will continue to be TE1 until he's not, and that's just it; he turns 34 in October, which is very old in terms of 'football age.' If you are competing, you want Kelce on your team; he'll help you win. However, we advocate for selling Kelce at fair market value if your team is anything but a contender.

Our PPG estimates are low for George Kittle and Darren Waller. If you look at their respective three-year average PPGs, they are well above our 2023 estimated PPG. So there is some pressure to the upside on Kittle and Waller, and Waller would be our buy of this group. Waller was coming off an injury in 2022 and a team change in 2023, which just might provide that PPG support you'd be looking for on a guy like him. He is only a few years removed from a 17.5 PPG season in 2020. These three guys will be over 30 years old next year, and production and value will fade in the coming years.

Cluster Charting:

Believe it or not, George Kittle was the highest-priced TE in this group three years ago. Kittle's price declined from the low to mid 8000s to the high 3000s over these three years, with a little blip up during the 2021 season. Kelce starts this chart around 6500 KTC and then falls off to about 4500 KTC. Then he pushes back up into the high 5000s through the 2022 season and 2023 offseason as fantasy players realize the positional differentiation Kelce offers. Waller's KTC pushes up during the 2020 season while he puts up a 17.5 PPG season. Then his price fell because of lower production, age, injuries, and bottoms on November 15th, 2022, at around 2600. Then he bounces up with a positive outlook for his target share in the NY Giants passing game.

TE Cluster | Age 25-28 | 11+ PPG

Cluster Trading notes:

If you take away Mark Andrews' 17.5 PPG season in 2021, you are left with a 12-13 PPG guy, which is still differentiated but not too extreme. In a sense, we are chasing that upside with Andrews, and I'm on board with that if you can get him at a value. Hockenson is a 12-13 PPG guy as well. He looks a little cheaper relative to Andrews but may not have the upside Andrews has. Goedert benefited tremendously from a revitalized Eagles offense led by Jalen Hurts and the moving on of long-time Eagle TE Zach Ertz to the tune of nearly 12 PPG in 2022. His biggest issue is the competition for target shares with AJ Brown and DeVonta Smith, limiting his upside unless there is an injury. These three guys are close enough to fair value not to warrant a buy/sell recommendation.

Cluster Charting:

Mark Andrews starts and finishes at the top. You can see the positive move up during his strong 2021 season, a drop off during the 2022 season, and a pushback into the high 5000s in the 2023 offseason. Hockenson has had some ups and downs, but he starts and finishes this chart around 5000 KTC. Last season, he experienced a good-sized run-up after putting up some good production and moved up even more after his in-season trade from the Lions to the Vikings. Goedert starts and finishes this chart at around 4000 KTC.

TE Cluster | 25+ | 8-11 PPG