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Things to Note Ahead of Romeo Power's (RMO) Q1 Earnings

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Romeo Power, Inc.  is slated to release first-quarter 2021 results on May 13, after the closing bell. The electric truck battery pack maker made NYSE debut on Dec 30, 2020 by merging with a special purpose acquisition company, RMG Acquisition Corp. The Zacks Consensus Estimate for first-quarter loss of 14 cents per share has widened by a penny over the past 90 days.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Romeo Power this time around. The 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, which is not the case here. 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.

Romeo Power — whose peers include QuantumScape (QS - Free Report) , EnerSys (ENS - Free Report) and Panasonic — has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).

Factors to Consider

Romeo Power, which is focused on the creation of lithium-ion battery modules and packs, is anticipated to have benefited from leading edge battery technology. Its alliance with Ecellix to develop superior electrification solutions bodes well. The agreement to deploy gen-next battery technology in Republic Services’ electric garbage trucks should have boosted its revenues.

However, shortage in the production and supply of battery cells is likely to have marred the company’s first-quarter performance. With demand for raw materials and cells exceeding supply amid widespread popularity of green vehicles and semiconductor shortage, the firm expects first-quarter results to be impacted. Further, high technology and product development expenses are likely to have dented margins. In the last reported quarter, its R&D and SG&A costs flared up 80% and 162%, respectively, on a year-over-year basis. These costs are likely to have mounted up in the first quarter of 2021 as well, in turn marring Romeo Power’s margins.

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