Here's What to Expect From Tesla (TSLA) This Earnings Season
Tesla TSLA is set to post third-quarter 2023 results on Oct 18, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 73 cents per share and $24.38 billion, respectively.
The consensus mark for TSLA’s third-quarter earnings per share has moved south by 5 cents in the past seven days. The estimate for the bottom line, however, implies a year-over-year decline of 30.5%. The Zacks Consensus Estimate for quarterly revenues, however, suggests a year-over-year rise of 13.6%.
Tesla surpassed the Zacks Consensus Estimate for earnings in the last reported quarter on record deliveries and revenues. Over the trailing four quarters, the electric vehicle (EV) king beat the Zacks Consensus Estimate on all occasions, with the average being 7.94%. This is depicted in the graph below:
Tesla, Inc. Price and EPS Surprise
Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote
Factors at Play
After reporting record deliveries for the first two quarters of 2023, Tesla witnessed a sequential fall in its deliveries for the September quarter. The company delivered 435,059 (15,985 Model S/X and 419,074 Model 3/Y) vehicles worldwide in the third quarter, topping our model estimate of 428,141 and increasing 26.5% increase from the year-ago levels. However, the deliveries marked a 6.6% sequential decline from 446,140 vehicles delivered in the second quarter of 2022.
Tesla produced 430,488 (416,800 Model 3/Y, and 13,688 Model S/X) vehicles during the quarter, up 17.6% on a yearly basis but down from 479,700 units produced in the second quarter of 2023.The sequential decline in production and delivery volumes was due to planned factory shutdowns for an upgrade.
Additionally, Tesla slashed prices on its inventory vehicles and existing models throughout the third quarter, which is expected to have put pressure on its gross margins. We expect gross profit from the automotive segment to decline 26.4%.
Operating margin is also likely to have been impacted by continued investments in capacity expansion of not just vehicle factories but also supercharging network service, internal applications and battery processes. We expect the metric to decline 170 basis points sequentially.
Meanwhile, the company is benefiting from increasing energy generation and storage revenues, thanks to the positive reception of Megapack and Powerwall products. Tesla is ramping up production at a dedicated Megapack factory to meet rising demand. These factors are likely to contribute positively to the upcoming results.
Our estimate for Services/Other unit is pegged at $2.35 billion, implying growth of 43% year over year and 9% quarter over quarter. We expect revenues from the Energy Generation/Storage segment at $1.57 billion, suggesting growth of 40.6% and 4% on a yearly and a sequential basis, respectively.
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 -2.74%. This is because the Most Accurate Estimate is pegged 2 cents lower 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 Favorable Combination
While an earnings beat looks uncertain for Tesla, here are a few 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:
PACCAR PCAR will release third-quarter 2023 results on Oct 24. The company has an Earnings ESP of +3.34% and a Zacks Rank #2.
The Zacks Consensus Estimate for PACCAR’s to-be-reported quarter’s earnings and revenues is pegged at $2.06 per share and $7.98 billion, respectively. PCAR surpassed earnings estimates in the trailing four quarters, with the average surprise being 15.2%.
Oshkosh Corp OSK will release third-quarter 2023 results on Oct 26. The company has an Earnings ESP of +8.24% and a Zacks Rank #3.
The Zacks Consensus Estimate for OSK’s to-be-reported quarter’s earnings and revenues is pegged at $2.18 per share and $2.46 billion, respectively. Oshkosh surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 27.4%.
Cummins CMI is expected to report third-quarter 2023 results on Nov 2. The company has an Earnings ESP of +0.48% and a Zacks Rank #3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.70 per share and $8.19 billion, respectively. CMI missed earnings estimates in three of the trailing four quarters and surpassed once, with the average negative surprise being 5.51%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Cummins Inc. (CMI) : Free Stock Analysis Report
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Oshkosh Corporation (OSK) : Free Stock Analysis Report
