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Will Tesla (TSLA) Fail to Impress Investors in Q2 Earnings?
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Tesla (TSLA - Free Report) is set to kick off the second-quarter earnings season for the Zacks Auto-Tires-Trucks sector next week. The electric vehicle (EV) behemoth will post quarterly results on Jul 20, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $1.91 per share and $17.48 billion, respectively.
Tesla surpassed the Zacks Consensus Estimate for earnings in the last reported quarter on higher-than-expected deliveries and automotive gross profit. The top and bottom lines witnessed year-over-year growth of 80.5% and a whopping 246%, respectively. Over the trailing four quarters, Tesla beat the Zacks Consensus Estimate on all occasions, with the average being 41.3%. This is depicted in the graph below:
But will the company be able to maintain its beat streak this time around as well? While investors are keeping their fingers crossed, an earnings beat doesn’t look too likely for Tesla this time around.
Estimate Revisions
The Zacks Consensus Estimate for second-quarter earnings per share has moved 2 cents south in the past seven days. The bottom-line estimate, however, implies a year-over-year surge of 31.7%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 46.2%.
Things to Note
The auto industry is battling a severe microchip crisis — a byproduct of the COVID pandemic that only worsened with the Russia-Ukraine war. The shortage of semiconductors and other components has impacted Tesla’s production volumes. Additionally, a resurgence in coronavirus cases in China had forced the company to temporarily shut down its Shanghai gigafactory for much of the early part of the quarter.
Operations at the Shanghai gigafactory were suspended for three weeks in April. Per China Passenger Car Association (CPCA), the factory produced a mere 10,757 vehicles during the month, marking a 97.7% fall from March levels. Tesla managed to gradually ramp up operations and produced 33,554 units at the Shanghai factory in May. Courtesy of around-the-clock production, Tesla’s output in June exceeded 70,000 units in Shanghai. June was the month of the highest vehicle production in Tesla’s history.
Nonetheless, Tesla reported weak overall deliveries for the April-June period, putting an end to the string of record quarterly deliveries. Second-quarter deliveries totaled 254,695 units (consisting of 16,162 Model S/X units and 238,533 Model 3/Y units), down from 310,048 vehicles delivered in the first quarter of 2022, snapping a two-year streak of quarter-on-quarter gains. The deliveries also missed the Zacks Consensus Estimate of 303,532 units. Lower-than-anticipated deliveries are likely to impact the results.
Further, high costs of raw materials and logistical constraints are also expected to have remained pain points. But on a brighter note, Tesla has been benefitting from increasing the average selling price (ASP) of vehicles since it is passing on the burden of escalating input costs to consumers through price hikes across its models. Thanks to rising ASP, we believe that Tesla might have managed to offset most of the production loss and commodity inflationary pressure in the second quarter.
Tesla’s sector top line is also likely to have recorded growth in solar and storage deployments 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 $893 million, suggesting a sequential and yearly increase of 45% and 11.5%, respectively.
Overall, while rising prices of Tesla vehicles and solid performance of the solar arm are likely to have aided Tesla’s earnings in the to-be-reported quarter, high commodity costs and shutdown of operations at the Shanghai factory for most of April may have played spoilsports.
What Does Our Model Say?
Our proven model doesn’t conclusively predict 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. That is not the case here.
Earnings ESP: Tesla has an Earnings ESP of -14.63%. This is because the Most Accurate Estimate of $1.63 per share is pegged 28 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.
Here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Driven Brand Holdings (DRVN - Free Report) has an Earnings ESP of +14.45% and a Zacks Rank #3. The stock is expected to report second-quarter 2022 earnings on Jul 27.
The Zacks Consensus Estimate for Driven’s to-be-reported quarter’s earnings and revenues is pegged at 29 cents per share and $486 million, respectively. Encouragingly, DRVN surpassed earnings estimates in the last four quarters, with the average being 30.1%.
Allison Transmission (ALSN - Free Report) has an Earnings ESP of +3.87% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Aug 3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.33 per share and $695 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with the average being 11.7%.
Image: Shutterstock
Will Tesla (TSLA) Fail to Impress Investors in Q2 Earnings?
Tesla (TSLA - Free Report) is set to kick off the second-quarter earnings season for the Zacks Auto-Tires-Trucks sector next week. The electric vehicle (EV) behemoth will post quarterly results on Jul 20, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $1.91 per share and $17.48 billion, respectively.
Tesla surpassed the Zacks Consensus Estimate for earnings in the last reported quarter on higher-than-expected deliveries and automotive gross profit. The top and bottom lines witnessed year-over-year growth of 80.5% and a whopping 246%, respectively. Over the trailing four quarters, Tesla beat the Zacks Consensus Estimate on all occasions, with the average being 41.3%. This is depicted in the graph below:
Tesla, Inc. Price and EPS Surprise
Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote
But will the company be able to maintain its beat streak this time around as well? While investors are keeping their fingers crossed, an earnings beat doesn’t look too likely for Tesla this time around.
Estimate Revisions
The Zacks Consensus Estimate for second-quarter earnings per share has moved 2 cents south in the past seven days. The bottom-line estimate, however, implies a year-over-year surge of 31.7%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 46.2%.
Things to Note
The auto industry is battling a severe microchip crisis — a byproduct of the COVID pandemic that only worsened with the Russia-Ukraine war. The shortage of semiconductors and other components has impacted Tesla’s production volumes. Additionally, a resurgence in coronavirus cases in China had forced the company to temporarily shut down its Shanghai gigafactory for much of the early part of the quarter.
Operations at the Shanghai gigafactory were suspended for three weeks in April. Per China Passenger Car Association (CPCA), the factory produced a mere 10,757 vehicles during the month, marking a 97.7% fall from March levels. Tesla managed to gradually ramp up operations and produced 33,554 units at the Shanghai factory in May. Courtesy of around-the-clock production, Tesla’s output in June exceeded 70,000 units in Shanghai. June was the month of the highest vehicle production in Tesla’s history.
Nonetheless, Tesla reported weak overall deliveries for the April-June period, putting an end to the string of record quarterly deliveries. Second-quarter deliveries totaled 254,695 units (consisting of 16,162 Model S/X units and 238,533 Model 3/Y units), down from 310,048 vehicles delivered in the first quarter of 2022, snapping a two-year streak of quarter-on-quarter gains. The deliveries also missed the Zacks Consensus Estimate of 303,532 units. Lower-than-anticipated deliveries are likely to impact the results.
Further, high costs of raw materials and logistical constraints are also expected to have remained pain points. But on a brighter note, Tesla has been benefitting from increasing the average selling price (ASP) of vehicles since it is passing on the burden of escalating input costs to consumers through price hikes across its models. Thanks to rising ASP, we believe that Tesla might have managed to offset most of the production loss and commodity inflationary pressure in the second quarter.
Tesla’s sector top line is also likely to have recorded growth in solar and storage deployments 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 $893 million, suggesting a sequential and yearly increase of 45% and 11.5%, respectively.
Overall, while rising prices of Tesla vehicles and solid performance of the solar arm are likely to have aided Tesla’s earnings in the to-be-reported quarter, high commodity costs and shutdown of operations at the Shanghai factory for most of April may have played spoilsports.
What Does Our Model Say?
Our proven model doesn’t conclusively predict 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. That is not the case here.
Earnings ESP: Tesla has an Earnings ESP of -14.63%. This is because the Most Accurate Estimate of $1.63 per share is pegged 28 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 currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
Here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Driven Brand Holdings (DRVN - Free Report) has an Earnings ESP of +14.45% and a Zacks Rank #3. The stock is expected to report second-quarter 2022 earnings on Jul 27.
The Zacks Consensus Estimate for Driven’s to-be-reported quarter’s earnings and revenues is pegged at 29 cents per share and $486 million, respectively. Encouragingly, DRVN surpassed earnings estimates in the last four quarters, with the average being 30.1%.
Allison Transmission (ALSN - Free Report) has an Earnings ESP of +3.87% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Aug 3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.33 per share and $695 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with the average being 11.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.