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Will Solid Model 3/Y Sales Drive Tesla's (TSLA) Q1 Earnings?

Zacks Equity Research
·4 mins read

Tesla TSLA is set to release first-quarter 2020 results on Apr 29, after the closing bell.

This Zacks Rank #3 (Hold) company’s results will likely reflect the favorable impact of the launch of its latest Model Y and growth in Model 3 delivery, which forms a major chunk of the automaker’s overall deliveries.

(Also read: What's in the Offing for Tesla This Earnings Season?)

Q4 Highlights

In the last reported quarter, Tesla posted earnings of $2.14 per share on revenues of $7.38 billion, beating the Zacks Consensus Estimate of $1.62 per share. Free cash flow was $1 billion, and cash and cash equivalents on its balance sheet grew to $6.3 billion.

Tesla reported record delivery of 112,000 vehicles and production of 105,000 units. During the fourth quarter, the company reported Model 3 production and deliveries of 86,958 and 92,620 units. It opened 16 new service centres during this period and added 24 Mobile Service vehicles to its fleet.

Record Deliveries in Q1

Tesla registered its best-ever production and deliveries of 102,672 and 88,400 vehicles, respectively, in first-quarter 2020, higher than the 77,100 and 63,000 units delivered in the corresponding quarter of 2019. Notably, despite the coronavirus outbreak, the company reported higher-than-anticipated deliveries on record levels of production from the new Gigafactory in Shanghai during the quarter.

With the Model 3 sedan being its flagship vehicle, Tesla has established itself as a leader in the EV segment. Strong performance and impressive design of its products are expected to have ramped up sales volumes during the quarter under review. Being the first mass-market electric car in North America and Europe, Model 3 is one of the best-selling vehicles. The car’s market-leading safety, performance and impressive specs have made it a huge success.

Moreover, Tesla’s Model Y crossover’s production started in January, while deliveries began in March, significantly ahead of schedule. This is also likely to have buoyed earnings for the to-be-reported quarter.

Notably, the Model 3/Y division registered production of 87,282 vehicles, while 76,200 vehicles were delivered.

Overall Earnings & Revenue Projections for Q1

The Zacks Consensus Estimate for Tesla’s earnings is 27 cents, which suggests a 109.31% surge from the prior-year reported figure. Also, the Zacks Consensus Estimate for sales of $5.89 billion indicates a 29.8% increase on a year-over-year basis.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around.

Anthem, Inc. ANTM has an Earnings ESP of +1.28% and carries a Zacks Rank #3 currently. The company is slated to release first-quarter 2020 earnings on Apr 29.

The Allstate Corporation ALL is set to report quarterly numbers on May 6. The company has an Earnings ESP of +2.18% and holds a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cigna Corporation CI is scheduled to release earnings figures on Apr 30. The stock has an Earnings ESP of +1.53% and currently carries a Zacks Rank #2.

More Stock News: This Is Bigger than the iPhone!    

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. 

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