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Tesla (TSLA) Beats on Q3 Earnings, Misses Revenue Estimates

Zacks Equity Research

Tesla, Inc. TSLA reported earnings per share of $1.86 in third-quarter 2019, against the Zacks Consensus Estimate of loss of 15 cents. The company had recorded earnings of $2.90 per share in the prior-year quarter. This outperformance resulted from continued volume growth and cost control, which is an important combination for achieving sustained, industry-leading profitability.

During the reported quarter, net income attributable to common shareholders amounted to $143 million compared with the year-ago net income of $311 million.

Revenues declined to $6.3 billion from the $6.82 billion registered in third-quarter 2018. The revenue figure missed the Zacks Consensus Estimate of $6.52 billion.

During the quarter under review, Tesla reported record delivery of 97,000 vehicles and production of 96,000 units.

Total automotive revenues, including that from automotive sales and leasing, decreased 12% year over year to $5.35 billion in the quarter.

Energy generation and storage revenues increased from $399 million in third-quarter 2018 to $402 million in the reported quarter. Services and other revenues were up significantly year over year to $548 million.

Tesla’s third-quarter 2019 automotive gross margin was 22.8%, shrinking 297 basis points (bps) from third-quarter 2018.

Tesla, Inc. Price and Consensus

Tesla, Inc. Price and Consensus

Tesla, Inc. price-consensus-chart | Tesla, Inc. Quote

Financial Position

Tesla had cash and cash equivalents of $5.34 billion as of Sep 30, 2019, compared with $2.97 billion, as of Sep 30, 2018.

Net cash provided by operating activities amounted to $756 million in third-quarter 2019 compared with $1.39 billion of net cash used in third-quarter 2018. Capital expenditure declined to $385 million from the year-ago quarter’s $510 million.

Model 3 Update

In third-quarter 2019, Tesla reported record Model 3 delivery of 79,703. During the quarter, the production rate of Model 3 continued to improve. Reducing waiting times and improving service experience are the company’s top priorities. It opened 11 new service centers in the quarter and added 68 Mobile Service vehicles to their fleet.
 

Outlook

Tesla is making efforts to raise vehicle deliveries, sequentially and annually, with some expected fluctuations from seasonality. The company is highly confident in exceeding 360,000 vehicle deliveries in 2019. Importantly, it expects positive quarterly free cash flow as well as net income, in the upcoming period, with possible temporary exceptions, particularly around the launch and ramp-up of new products.

Zacks Rank & Other Stocks to Consider

Tesla currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks are BRP Inc. DOOO, sporting a Zacks Rank #1 (Strong Buy), Standard Motor Products, Inc. SMP and Alarm.com Holdings, Inc. ALRM, both carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP has an expected earnings growth rate of 18.49% for 2019. The company’s shares have rallied 4.6% in the past year.

Standard Motor has a projected earnings growth rate of 21.96% for the current year. Its shares have gained around 16.6% in the past year.

Alarm.com has an estimated earnings growth rate of 5.26% for the ongoing year. The company’s shares have rallied roughly 10.5% in a year’s time.

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