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Tesla's (TSLA) Earnings Beat in Q1, Revenues Improve Y/Y

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Tesla, Inc. TSLA incurred an adjusted loss of $3.35 per share in first-quarter 2018, narrower than the Zacks Consensus Estimate of the loss of $3.37. The company reported loss of $1.33 per share in the prior-year quarter.

The reported net loss in the quarter under review was $784.6 million compared with the year-ago net loss of $397.2 million.

Revenues increased to $3.41 billion from $2.70 billion registered in first-quarter 2017. The figure surpassed the Zacks Consensus Estimate of $3.17 billion.

Tesla produced 34,494 vehicles in first-quarter 2018, up 40% sequentially. This happens to be the most productive quarter in the history of Tesla. Out of total vehicles produced, 24,728 were Model S and Model X while 9,766 were Model 3. Also, during the reported quarter, the company delivered 29,997 vehicles which including 21,815 Model S and Model X vehicles along with 8,182 Model 3 vehicles.

Total automotive revenues, which include revenues from automotive sales and leasing, increased 19% year over year to $2.74 billion in the reported quarter. The rise was due to Model 3 deliveries and the adoption of new accounting standards.

Energy generation and storage revenues soared from $213.9 million in first-quarter 2017 to $410 million in the reported quarter. The rise was mainly due to considerable growth of energy-storage deployments.

Services and other revenues increased 37% year over year, primarily due to higher used-car sales.

Tesla’s first-quarter 2018 automotive gross margin was 18.8%, declining 904 basis points (bps) from first-quarter 2017.

Energy generation and storage gross margin declined 2,061 bps on a year-over-year basis to 8.5%.

Financial Position

Tesla had cash and cash equivalents of $2.67 billion as of Mar 31, 2018, compared with $3.37 billion, as of Dec 31, 2017.

Net cash used in operating activities amounted to $398.4 million in first-quarter 2018 compared with net cash provided of $509.9 million in fourth-quarter 2017. Capital expenditures jumped to $655.7 million from $552.6 million in the year-ago quarter.

Business Expansion

In first-quarter 2018, Tesla opened nine new stores and service locations. The company also opened 77 new Supercharger locations, reaching the global total to 1,205.

Model 3 Update

During the second half of first-quarter 2018, Tesla made solid progress in Model 3 production and has been able to carry this trend into second-quarter 2018. In the prior week of this earnings release, the company produced 2,270 Model 3 and 2,024 Model S and Model X vehicles, setting a new record. The company continues to target Model 3 production of about 5,000 per week in about two months.

Tesla, Inc. Price, Consensus and EPS Surprise

Tesla, Inc. Price, Consensus and EPS Surprise | Tesla, Inc. Quote

Outlook

The company expects to shut down production for about 10 days in second-quarter 2018 (including the shutdown in April) to address bottlenecks and raise production.

Tesla expects to deliver around 100,000 units of Model S and Model X in 2018, similar to the prior-quarter guidance.

Energy generation and storage revenues are likely to improve significantly in 2018 due to expanding capacity for Powerwall and Powerpack products at Gigafactory 1.

Zacks Rank & Key Picks

Tesla currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Visteon Corporation VC, Wabash National Corporation WNC and Fiat Chrysler Automobiles N.V. FCAU. Visteon and Wabash National currently carry a Zacks Rank #2 (Buy) while Fiat Chrysler sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Visteon has expected long-term growth rate of 16.6%. In the last three months, shares of the company have gained 3.8%.

Wabash National has expected long-term growth rate of 21.5%. Shares of the company have risen 5.2% in the last six months.

Fiat Chrysler has expected long-term growth rate of 23.7%. In the last six months, shares of the company have gained 24.8%.

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