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Is a Beat in the Offing for Tesla (TSLA) This Earnings Season?

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Tesla (TSLA - Free Report) is set to release second-quarter 2021 results on Jul 26, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 90 cents and $11.39 billion, respectively.

The electric vehicle (EV) behemoth not only managed to post profit for the seventh straight quarter in the January-March period but also surpassed the Zacks Consensus Estimate on higher-than-expected automotive gross profit.

Over the trailing four quarters, Tesla beat the Zacks Consensus Estimate on three occasions and missed in the other, the average surprise being an outstanding 147.42%. 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 Revisions

The Zacks Consensus Estimate for second-quarter earnings per share moved north by a penny in the past 30 days. This also compares favorably with the year-ago quarter’s earnings of 44 cents per share, indicating a whopping 104.6% rise, year on year. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year surge of 88.7%.

Earnings Whispers

Our proven model predicts an earnings beat for Tesla 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.

Earnings ESP: Tesla has an Earnings ESP of +5.85%. This is because the Most Accurate Estimate of 95 cents per share comes in five cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Tesla carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Amid the rising preference for personal mobility, low interest rates and government stimulus, demand for vehicles was strong in the second quarter.

Consequently, Tesla delivered 201,250 units in second-quarter 2021, up from the 90,650 units delivered in the year-ago period and the 184,800 units delivered in the prior quarter.

Increasing demand for Model 3 and Y, which form a major chunk of the automaker’s overall deliveries, can be attributed to Tesla's robust vehicle sales during the quarter. Notably, for the quarter in discussion, the Model 3/Y division registered deliveries of 199,360 vehicles, beating the Zacks Consensus Estimate of 196,955 units. The reported figure is way higher than the delivery of 80,050 units of Model 3/Y during the corresponding quarter last year and the 182,780 units delivered in the prior quarter. In fact, the Zacks Consensus Estimate for automotive revenues for the quarter under discussion is pegged at $9,656 million, calling for a year-over-year jump of 96.6%.  

Solar and storage deployments are also expected to have witnessed exponential growth during the quarter, aided by the company’s Solar Roof and Powerwall products. The consensus mark for energy generation and storage revenues is pegged at $524 million, suggesting an increase from the year-ago level of $370 million. The same for revenues from Automotive Leasing & Services and Others is pegged at $318 million and $823 million, indicating year-over-year growth of 18.7% and 69%, respectively.

Thus, robust demand for Model 3/Y and stellar performance of the solar arm are likely to have fueled Tesla’s earnings in the to-be-reported quarter.

Other Stocks With Favorable Combinations

Here are some other stocks in the auto space, which, according to our model, also have the right combination of elements to post an earnings beat in the quarter to be reported:

Ford Motor Company (F - Free Report) has an Earnings ESP of +227.1% and flaunts a Zacks Rank #1, at present. It is scheduled to report earnings results on Jul 28.

American Axle & Manufacturing Holdings (AXL - Free Report) has an Earnings ESP of +1,100% and carries a Zacks Rank of 3, at present. It will announce second-quarter results on Jul 30.

Tenneco (TEN - Free Report) has an Earnings ESP of +9.34% and currently carries a Zacks Rank #3. The company is slated to release quarterly numbers on Aug 5.