Price Cuts & Higher Deliveries to Boost Tesla (TSLA) Q2 Earnings
Tesla, Inc. TSLA is set to release its second-quarter 2023 results on Jul 19, after the closing bell. The focal point of the electric vehicle (EV) manufacturer’s earnings release will be its vehicle production and deliveries. Higher year-over-year deliveries during the quarter under discussion are likely to have enhanced results.
(Also Read: Tesla to Report Q2 Earnings: What's in the Offing? )
Q1 Highlights
In the last reported quarter, Tesla reported earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate of 83 cents. This marked the ninth straight earnings beat for the company.
Higher-than-expected revenues from Energy Generation and Storage and Services and Other segments resulted in this outperformance. The bottom line, however, fell compared with the year-ago earnings of $1.07 per share. Total revenues came in at $23,329 million, missing the consensus mark of $23,472 million. However, the top line witnessed year-over-year growth of 24%.
Production and delivery totaled 440,808 and 422,875 vehicles, respectively, for first-quarter 2023, reflecting a year-over-year jump of 44% and 36%, respectively. Model 3/Y registered production and deliveries of 421,371 and 412,180 vehicles, respectively, marking year-over-year growth of 45% and 40%, respectively. Production and delivery of the Model S/X totaled 19,437 and 10,695 units, respectively.
Tesla had cash/cash equivalents and long-term debt and finance leases of $16,048 million and $1,272 million, respectively, as of Mar 31, 2023. The firm generated a free cash flow of $441 million during first-quarter 2023, falling 80.2% year over year.
Q2 Deliveries Outpace Estimates
Second-quarter deliveries totaled 466,140 units, up 83% from the year-ago quarter and 10% from the prior quarter, which also surpassed the Zacks Consensus Estimate for total vehicle deliveries of 444,569. The reported number also surpassed our estimate of 434,736 deliveries for the quarter under review.
To counter rising interest rates that have made financing vehicles expensive, Tesla resorted to price cuts, starting this year, on most of its models to spur demand. With the vehicles getting more affordable, the company is witnessing strong orders. These price cuts make its cars more competitive compared with rivals and also make several of its models eligible for the $7,500 tax rebate.
Tesla’s Model 3 and Y are the company’s most successful EVs, accounting for most of its sales. For the quarter, Tesla delivered 446,915 Model 3/Y, surpassing the Zacks Consensus Estimate and our estimate of 419,987 units and 420,156 units, respectively.
Also, deliveries of models S and X outpaced estimates. Second-quarter 2023 deliveries of models S and X came in at 19,225 units, higher than the Zacks Consensus Estimate and our forecast of 16,647 units and 14,579 units, respectively.
As for production, Tesla manufactured 479,700 vehicles (460,211 units of Model 3/Y and 19,489 units of Model S/X).
For the quarter under discussion, the Zacks Consensus Estimate for total production was 452,602 units (433,555 Model 3/Y units and 19,047 Model S/X units).
Overall Earnings & Revenue Projections for Q2
Our proven model predicts an earnings beat for Tesla as it has the right combination of a positive Earnings ESP and a favorable Zacks Rank. 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.
The company has an Earnings ESP of +2.97%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Tesla currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 83 cents per share, indicating a rise of 9.21% on a year-over-year basis. The consensus mark has remained unchanged in the past seven days. The Zacks Consensus Estimate of $24.88 billion for sales indicates a 46.95% rise on a year-over-year basis.
Other Stocks With the Favorable Combination
Here are a few more players from the auto space that, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Genuine Parts Company GPC will release second-quarter 2023 results on Jul 20. The company has an Earnings ESP of +0.79% and a Zacks Rank #2.
The Zacks Consensus Estimate for Genuine Parts’ to-be-reported quarter’s earnings and revenues is pegged at $2.31 per share and $5.95 billion, respectively. GPC surpassed earnings estimates in all of the trailing four quarters, the average surprise being 8.15%.
Autoliv ALV is set to release second-quarter 2023 results on Jul 21. The company has an Earnings ESP of +3.82% and a Zacks Rank #3.
The Zacks Consensus Estimate for Autoliv’s to-be-reported quarter’s earnings and revenues is pegged at $1.44 per share and $2.49 billion, respectively. ALV surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 26.93%.
General Motors Company GM will release second-quarter 2023 results on Jul 25. The company has an Earnings ESP of +9.37% and a Zacks Rank #3.
The Zacks Consensus Estimate for General Motors’ to-be-reported quarter’s earnings and revenues is pegged at $1.66 per share and $42.46 billion, respectively. GM surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 15.50%.
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Genuine Parts Company (GPC) : Free Stock Analysis Report
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