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Will Progress in Production Aid Tesla's (TSLA) Q2 Earnings?
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Tesla, Inc. (TSLA - Free Report) is expected to report second-quarter earnings results on Aug 1, after the market closes. In the last reported quarter, this electric carmaker delivered an earnings beat of 0.6%.
In the trailing four quarters, the company missed estimates once and beat on the other three, with an average earnings surprise of 4.4%.
In the past three months, shares of Tesla have outperformed the industry it belongs to. Over this time, shares of the company have grown 6.9%, whereas the industry increased 3.1%.
Let’s see, how things are shaping up for this announcement.
Second-quarter 2018 has been productive for Tesla. During the quarter under review, the company witnessed 55% sequential rise in production to 53,339 vehicles, with Model 3 production rising almost three times from the last reported quarter. The total production number consists of 24,761 units of Model S and X, and 28,578 units of Model 3.
Notably, Tesla achieved its goal to produce 5,000 Model 3 sedans in the last week of second-quarter 2018. In the past week, the company manufactured 5,031 Model 3 units along with 1,913 Model S and X vehicles.
Further, Tesla anticipates reaching 6,000 units of Model 3 per week by the end of August. The company reaffirmed its net income and cash flow guidance for the third and the fourth quarter to be positive, in spite of higher tariffs, and a weaker U.S. currency.
Although second-quarter revenues are anticipated to increase, high costs associated with the company’s Model 3 ramp up are likely to have some negative impact on its results. In fact, a higher mix of Model 3s in the company’s automotive sales mix may have some negative impact on the gross margin in the short run.
The Zacks Consensus Estimate for Total Automotive revenues for the soon-to-be-released quarter is $3.04 billion. The company registered Total Automotive revenues of $2.74 in first-quarter 2018.
The Zacks Consensus Estimate for Energy, Generation and Storage revenues for the soon-to-be-released quarter is $489 million. The company registered Energy, Generation and Storage revenues of $410 million in first-quarter 2018.
The Zacks Consensus Estimate for Services and Other revenues for the soon-to-be-released quarter is $280 million. The company registered Services and Other revenues of $263 million in first-quarter 2018.
Earnings Whispers
Our proven model does not predict earnings beat for Tesla this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Earnings ESP: Tesla’s Earnings ESP is -1.66% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of $2.75 and $2.71, respectively.
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 #3.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:
Visteon Corporation (VC - Free Report) has an Earnings ESP of +6.15% and a Zacks Rank #3. The company’s second-quarter 2018 financial results are scheduled to be released on Jul 26.
Fox Factory Holding Corp. (FOXF - Free Report) has an Earnings ESP of +0.35% and a Zacks Rank #2. The company’s second-quarter 2018 financial results are scheduled to be released on Aug 1.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #3. The company’s second-quarter 2018 financial results are expected to be released on Aug 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Progress in Production Aid Tesla's (TSLA) Q2 Earnings?
Tesla, Inc. (TSLA - Free Report) is expected to report second-quarter earnings results on Aug 1, after the market closes. In the last reported quarter, this electric carmaker delivered an earnings beat of 0.6%.
In the trailing four quarters, the company missed estimates once and beat on the other three, with an average earnings surprise of 4.4%.
In the past three months, shares of Tesla have outperformed the industry it belongs to. Over this time, shares of the company have grown 6.9%, whereas the industry increased 3.1%.
Let’s see, how things are shaping up for this announcement.
Tesla, Inc. Price and EPS Surprise
Tesla, Inc. Price and EPS Surprise | Tesla, Inc. Quote
Factors Influencing This Quarter
Second-quarter 2018 has been productive for Tesla. During the quarter under review, the company witnessed 55% sequential rise in production to 53,339 vehicles, with Model 3 production rising almost three times from the last reported quarter. The total production number consists of 24,761 units of Model S and X, and 28,578 units of Model 3.
Notably, Tesla achieved its goal to produce 5,000 Model 3 sedans in the last week of second-quarter 2018. In the past week, the company manufactured 5,031 Model 3 units along with 1,913 Model S and X vehicles.
Further, Tesla anticipates reaching 6,000 units of Model 3 per week by the end of August. The company reaffirmed its net income and cash flow guidance for the third and the fourth quarter to be positive, in spite of higher tariffs, and a weaker U.S. currency.
Although second-quarter revenues are anticipated to increase, high costs associated with the company’s Model 3 ramp up are likely to have some negative impact on its results. In fact, a higher mix of Model 3s in the company’s automotive sales mix may have some negative impact on the gross margin in the short run.
The Zacks Consensus Estimate for Total Automotive revenues for the soon-to-be-released quarter is $3.04 billion. The company registered Total Automotive revenues of $2.74 in first-quarter 2018.
The Zacks Consensus Estimate for Energy, Generation and Storage revenues for the soon-to-be-released quarter is $489 million. The company registered Energy, Generation and Storage revenues of $410 million in first-quarter 2018.
The Zacks Consensus Estimate for Services and Other revenues for the soon-to-be-released quarter is $280 million. The company registered Services and Other revenues of $263 million in first-quarter 2018.
Earnings Whispers
Our proven model does not predict earnings beat for Tesla this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Earnings ESP: Tesla’s Earnings ESP is -1.66% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of $2.75 and $2.71, respectively.
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 #3.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:
Visteon Corporation (VC - Free Report) has an Earnings ESP of +6.15% and a Zacks Rank #3. The company’s second-quarter 2018 financial results are scheduled to be released on Jul 26.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Fox Factory Holding Corp. (FOXF - Free Report) has an Earnings ESP of +0.35% and a Zacks Rank #2. The company’s second-quarter 2018 financial results are scheduled to be released on Aug 1.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #3. The company’s second-quarter 2018 financial results are expected to be released on Aug 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>