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Will Rising Deliveries Offset NIO's Cost Woes in Q3 Earnings?

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NIO Inc. (NIO - Free Report) is set to release fiscal third-quarter 2019 results on Dec 30, before the opening bell. The Zacks Consensus Estimate for fiscal third-quarter loss per ADS of 41 cents has remained stable for the past seven days. This compares favorably with the year-ago loss of $1.51 per ADS.  The Zacks Consensus Estimate for revenues is pegged at $248.5 million, suggesting an improvement from $214 million reported in the prior-year quarter.

Factors at Play

Increasing demand for NIO’s ES6 model is likely to be reflected in the firm’s third-quarter 2019 results. During the to-be-reported quarter, NIO delivered 4,799 vehicles, marking a 46.8% year-over-year increase. Further, the deliveries also exceeded the mid-point of the company’s guidance by 11.6%. The ES6 model, NIO’s 5-seater premium electric SUV, accounted for the bulk of the deliveries. Notably, third-quarter 2019 deliveries comprised 4,196 and 603 units of ES6s and ES8s, respectively. However, the company has been bearing the brunt of operational inefficiency over the past several quarters and the trend is likely to have continued to impact the quarter-to-be-reported as well.

Overall, while rising deliveries are expected to have positively impacted NIO’s revenues, escalating R&D and SG&A costs are likely to have dented operating margins. 

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for NIO. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of 0.00%.

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

While our model does not indicate an earnings beat for the electric vehicle startup NIO, some of the auto biggies, which delivered better-than expected results in the third quarter of 2019 include Tesla (TSLA - Free Report) , Ford (F - Free Report) and General Motors (GM - Free Report) among others.

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