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Is a Beat Likely for Tesla (TSLA) This Earnings Season?

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Tesla (TSLA - Free Report) is slated to release fourth-quarter 2020 results on Jan 27, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at 85 cents per share and $10 billion, respectively.

Tesla delivered stellar results for third-quarter 2020, posting profit for the fifth straight quarter. The electric-vehicle (EV) pioneer beat third-quarter 2020 earnings estimates on higher-than-anticipated automotive revenues, thanks to record deliveries. It has managed to beat earnings estimates in each of the trailing four quarters, with the average being 319.7%. This is depicted in the graph below:

Tesla, Inc. Price and EPS Surprise

Tesla, Inc. Price and EPS Surprise

Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for Tesla’s fourth-quarter earnings per share has been revised upward by 5 cents in the past 30 days. The figure indicates a year-over-year uptick of 97%. The Zacks Consensus Estimate for fourth-quarter revenues indicates year-over-year growth of 37.4%.

Earnings Whispers

Our proven model predicts an earnings beat for Tesla for the to-be-reported quarter, as it has the right combination of the two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Tesla has an Earnings ESP of +17.23%. This is because the Most Accurate Estimate is pegged 15 cents higher than the Zacks Consensus Estimate.

Zacks Rank: It sports a Zacks Rank of 1, currently.

Factors at Play

Amid rising popularity of green vehicles, Tesla’s delivery count for fourth-quarter 2020 hit a new record. It smashed the company’s previous best in the third quarter, which witnessed deliveries of 139,300 units. During the to-be-reported quarter, the EV king registered deliveries of 180,570 units, comprising 161,650 Model 3 and Model Y cars and 18,920 Model S and X vehicles. Total fourth-quarter deliveries were up more than 61% on a year-over-year basis.

Increasing deliveries of Model 3, which forms a major chunk of the automaker’s overall deliveries, are likely to have aided Tesla’s automotive revenues in the to-be-reported quarter. Also, ramped up production and deliveries of Model Y are likely to have buoyed its top line. The Zacks Consensus Estimate for automotive revenues is pegged at $8,703 million, indicating yearly and sequential growth of 43.2% and 18.5%, respectively.  

Solar and storage deployments are also expected to have witnessed significant growth, aided by Megapack and Powerwall products. The consensus mark for energy generation and storage revenues is pegged at $528 million, indicating an increase from the year-ago level of $372 million. The same for revenues from Automotive Leasing & Services and Others is pegged at $271 million and $657 million, indicating year-over-year growth of 8.8% and 23.7%, respectively.

All in all, robust Model 3/Y demand, ramped up output from the Shanghai Gigafactory, and solid performance of the energy and storage business are likely to enable Tesla to maintain its winning streak in the to-be-reported quarter as well. Encouragingly, the company hit a major milestone during the quarter by securing a prestigious spot in the S&P 500 Index on Dec 21, 2020.

Other S&P 500 Stocks With Favorable Combination

Here are some other noted S&P 500 firms, which, according to our model, also have the right combination of elements to post an earnings beat in the quarter to be reported:

Facebook (FB - Free Report) has an Earnings ESP of +1.67% and currently carries a Zacks Rank #2. The company is slated to release fourth-quarter 2020 earnings on Jan 27.

Alphabet (GOOGL - Free Report) has an Earnings ESP of +0.75% and carries a Zacks Rank #2 currently. The company is slated to release fourth-quarter 2020 earnings on Feb 2.

Amazon (AMZN - Free Report) has an Earnings ESP of +8.92% and carries a Zacks Rank #3 at present. The company is slated to release fourth-quarter 2020 earnings on Feb 2.

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