We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should You Buy Tesla (TSLA) Stock Ahead of Q2 Earnings?
Read MoreHide Full Article
Tesla (TSLA - Free Report) has seen its stock price slip over 3% in the last three months amid nearly constant updates and negative headlines, many of which focus on outspoken CEO Elon Musk. But investors need to block out the noise to focus on what they should really expect from Tesla’s second-quarter financial results in order to see if TSLA stock might be worth buying.
Overview
UBS analyst Colin Langan reaffirmed his “sell” rating for Tesla stock Monday and slapped on a $195 price target, which marked a 34% downside from Friday’s closing price of $297.18 per share. “We do not see sustainable profitability in the second half; however, given the higher priced initial mix, a Q3 profit is possible if TSLA can average production of over 3k/week,” Langan wrote in a note to clients. “We expect margins to correct in 2019 as the mix normalizes toward a long-term average. Our Sell thesis remains focused on cash burn, sustainable profitability, and quality concerns.”
UBS’ update comes roughly a week after reports detailed Tesla’s refund requests from suppliers, for a “meaningful” amount of money. Tesla noted that the refunds, some of which date back to 2016, are essential to the company’s continued operations. “It’s simply ludicrous and it just shows that Tesla is desperate right now,” veteran manufacturing consultant Dennis Virag told the Wall Street Journal. “They’re worried about their profitability but they don’t care about their suppliers’ profitability.”
Tesla also announced in June its plan to cut 9% of its workforce in order to reach its profitability goals—Musk expects the company to turn a profit in the second half of 2018. The firm noted that it finally reached its 5,000 per week Model 3 production goal in the last week of the second quarter, with a new goal of 6,000 mass-market Model 3s per week. Investors should note that reports suggest that Tesla did everything in its power to reach this goal, including reallocating resources from elsewhere, which means it might not be sustainable.
Tesla released its official second-quarter production and deliveries totals in early July. The company said it produced 53,339 vehicles during Q2, which represented a 55% increase from the first quarter, and, according to the company, marked the “most productive quarter in Tesla history by far.” Overall, Tesla delivered 18,440 Model 3s, 10,930 Model S vehicles, and 11,370 Model Xs, for a total of 40,740 vehicles.
Price Movement
Shares of Tesla are up around 116% over the last five years, which could be far less than some might think since the company has been talked about as a game-changer during much of this time. TSLA stock has also experienced some massive swings over the last five years. More recently, shares of Tesla are up only 9% over the last three years, which falls behind the S&P 500’s 35% climb. TSLA stock has also sunk approximately 10% during the last 12 months, against the S&P’s 15% gain.
Outlook
Our current Zacks Consensus Estimates are calling for Tesla’s Q2 revenues to climb by over 38% to hit $3.86 billion. Looking ahead to the full-year, Tesla’s revenues are expected to reach $18.36 billion, which would mark a roughly 56% climb from fiscal 2017’s total of $11.76 billion.
At the other end of the income statement, Tesla is projected to report an adjusted second-quarter loss of $2.70 per share—which is far greater than the year-ago period’s loss of $1.33 per share—as well as a full-year loss of $8.28 per share. However, the company is projected to report adjusted full-year earnings in fiscal 2019.
Earnings Trends
Tesla has received three downward earnings estimate revisions against one positive revision for Q2, within the last 60 days. TSLA has seen more mixed revision activity for its full-year over this same time period.
Tesla’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for a loss of $2.74 per share, which is four cents worse than our current consensus estimate. The firm has also fallen short of our earnings estimates in eight out of the last 10 quarters.
Bottom Line
Tesla is currently a Zacks Rank #3 (Hold) but sports “F” grades for both Value and Growth in our Style Scores system. The company also has a history of trading wildly up and down following the release of its quarterly earnings results.
Furthermore, investors should note that General Motors (GM - Free Report) , Volkswagen , Ford (F - Free Report) , Toyota (TM - Free Report) , and other established automakers have started to invest in their own electric vehicle futures. Therefore, it seems like Tesla is a wait and see stock at the moment.
Make sure to check back here for our full analysis of Tesla’s actual results after market close on Wednesday!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Should You Buy Tesla (TSLA) Stock Ahead of Q2 Earnings?
Tesla (TSLA - Free Report) has seen its stock price slip over 3% in the last three months amid nearly constant updates and negative headlines, many of which focus on outspoken CEO Elon Musk. But investors need to block out the noise to focus on what they should really expect from Tesla’s second-quarter financial results in order to see if TSLA stock might be worth buying.
Overview
UBS analyst Colin Langan reaffirmed his “sell” rating for Tesla stock Monday and slapped on a $195 price target, which marked a 34% downside from Friday’s closing price of $297.18 per share. “We do not see sustainable profitability in the second half; however, given the higher priced initial mix, a Q3 profit is possible if TSLA can average production of over 3k/week,” Langan wrote in a note to clients. “We expect margins to correct in 2019 as the mix normalizes toward a long-term average. Our Sell thesis remains focused on cash burn, sustainable profitability, and quality concerns.”
UBS’ update comes roughly a week after reports detailed Tesla’s refund requests from suppliers, for a “meaningful” amount of money. Tesla noted that the refunds, some of which date back to 2016, are essential to the company’s continued operations. “It’s simply ludicrous and it just shows that Tesla is desperate right now,” veteran manufacturing consultant Dennis Virag told the Wall Street Journal. “They’re worried about their profitability but they don’t care about their suppliers’ profitability.”
Tesla also announced in June its plan to cut 9% of its workforce in order to reach its profitability goals—Musk expects the company to turn a profit in the second half of 2018. The firm noted that it finally reached its 5,000 per week Model 3 production goal in the last week of the second quarter, with a new goal of 6,000 mass-market Model 3s per week. Investors should note that reports suggest that Tesla did everything in its power to reach this goal, including reallocating resources from elsewhere, which means it might not be sustainable.
Tesla released its official second-quarter production and deliveries totals in early July. The company said it produced 53,339 vehicles during Q2, which represented a 55% increase from the first quarter, and, according to the company, marked the “most productive quarter in Tesla history by far.” Overall, Tesla delivered 18,440 Model 3s, 10,930 Model S vehicles, and 11,370 Model Xs, for a total of 40,740 vehicles.
Price Movement
Shares of Tesla are up around 116% over the last five years, which could be far less than some might think since the company has been talked about as a game-changer during much of this time. TSLA stock has also experienced some massive swings over the last five years. More recently, shares of Tesla are up only 9% over the last three years, which falls behind the S&P 500’s 35% climb. TSLA stock has also sunk approximately 10% during the last 12 months, against the S&P’s 15% gain.
Outlook
Our current Zacks Consensus Estimates are calling for Tesla’s Q2 revenues to climb by over 38% to hit $3.86 billion. Looking ahead to the full-year, Tesla’s revenues are expected to reach $18.36 billion, which would mark a roughly 56% climb from fiscal 2017’s total of $11.76 billion.
At the other end of the income statement, Tesla is projected to report an adjusted second-quarter loss of $2.70 per share—which is far greater than the year-ago period’s loss of $1.33 per share—as well as a full-year loss of $8.28 per share. However, the company is projected to report adjusted full-year earnings in fiscal 2019.
Earnings Trends
Tesla has received three downward earnings estimate revisions against one positive revision for Q2, within the last 60 days. TSLA has seen more mixed revision activity for its full-year over this same time period.
Tesla’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for a loss of $2.74 per share, which is four cents worse than our current consensus estimate. The firm has also fallen short of our earnings estimates in eight out of the last 10 quarters.
Bottom Line
Tesla is currently a Zacks Rank #3 (Hold) but sports “F” grades for both Value and Growth in our Style Scores system. The company also has a history of trading wildly up and down following the release of its quarterly earnings results.
Furthermore, investors should note that General Motors (GM - Free Report) , Volkswagen , Ford (F - Free Report) , Toyota (TM - Free Report) , and other established automakers have started to invest in their own electric vehicle futures. Therefore, it seems like Tesla is a wait and see stock at the moment.
Make sure to check back here for our full analysis of Tesla’s actual results after market close on Wednesday!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>