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Tesla (TSLA) Earnings and Revenues Miss Estimates in Q1

Zacks Equity Research

Tesla, Inc. TSLA reported loss per share of $2.90 in first-quarter 2019, wider than the Zacks Consensus Estimate of loss of $1.21. The company recorded loss of $3.35 per share in the prior-year quarter.

During the reported quarter, net loss attributable to common shareholders amounted $702.1 million compared with the year-ago net loss of $709.6 million.

Revenues increased to $4.5 billion from $3.4 billion registered in first-quarter 2018. However, the figure missed the Zacks Consensus Estimate of $5.8 billion.

During the quarter under review, Tesla’s vehicle production and delivery numbers registered sequential declines of 10.9% and 31%, respectively. The company managed to produce around 77,100 vehicles — consisting of 62,950 Model 3, and 14,150 Model S and X. Out of the total delivered figure of 63,000 units, Model 3 accounted for 50,900 while Model S and X were 12,100.

Total automotive revenues, including revenues from automotive sales and leasing, increased 36% year over year to $3.7 billion in the reported quarter.

Energy generation and storage revenues decreased from $410 million in first-quarter 2018 to $324.7 million in the reported quarter. This decline was mainly due to lower solar deployments.

Services and other revenues increased 87.1% year over year to $492.9 million.

Tesla’s first-quarter 2019 automotive gross margin was 20.2%, increasing 43 basis points (bps) from first-quarter 2018.

Energy generation and storage gross margin decreased 606 bps on a year-over-year basis to 2.4%.

Tesla, Inc. Price, Consensus and EPS Surprise

 

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

Financial Position

Tesla had cash and cash equivalents of $2.20 billion as of Mar 31, 2019, compared with $2.67 billion, as of Mar 31, 2018.

Net cash used by operating activities amounted to $639.6 million in first-quarter 2019 compared with $398.4 million of net cash used in first-quarter 2018. Capital expenditure declined to $279.9 million from $655.7 million in the year-ago quarter.

Model 3 Update

The Model 3 production increased 3% in first-quarter 2019 on a sequential basis. This modest improvement in production rate was due to changes in the production process for the launch of new variants of Model 3, fewer working days and supplier limitation.

The company began production and deliveries of Model 3 vehicles for the international markets during first-quarter 2019. In order to quickly meet overseas demand, Europe and China Model 3 builds occurred in the first half of the quarter while US Model 3 builds occurred in the second half.

Outlook

Tesla reiterates 2019 vehicle delivery guidance of 360,000-400,000 vehicles. The company targets to produce 500,000 vehicles globally in 2019.

Again, Energy generation and storage revenues are likely to increase considerably due to the storage business. Further, the Services and Other business is set to grow in 2019 on account of rise in fleet size and used-car volume.

Zacks Rank & Stocks to Consider

Tesla currently carries a Zacks Rank #5 (Strong Sell). Shares of the company have underperformed the industry it belongs to in the past three months. Over this time frame, it has lost 12.7% against the industry’s growth of 2.5%.

A few better-ranked stocks in the broader auto sector are Geely Automobile Holdings Ltd. GELYY, PACCAR Inc. PCAR and Fox Factory Holding Corp. FOXF. While Geely currently sports a Zacks Rank #1 (Strong Buy), PACCAR and Fox Factory carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Geely’ long-term growth rate is projected at 7%. Over the past three months, shares of the company have gained 28.5%.

PACCAR has an expected long-term growth rate of 8.4%. Shares of the company have gained 16.6% over the past three months.

Fox Factory has an expected long-term growth rate of 15.1%. Shares of the company have gained 29.5% over the past three months.

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