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Things Not Looking Up for Workhorse's (WKHS) Q4 Earnings

·4 min read

Workhorse Group, Inc. WKHS is slated to release fourth-quarter 2021 results on Mar 1, before the bell. The Zacks Consensus Estimate for the quarter’s loss is pegged at 14 cents per share, which has been unchanged over the past 90 days. The bottom-line projection implies a year-over-year deterioration of 156%.

The electric vehicle (EV) maker posted a wider-than-expected loss in the last reported quarter. The company missed earnings estimates in three of the preceding four quarters and surpassed the same in the other, with the average negative surprise being 132.1%.

Workhorse Group, Inc. Price and EPS Surprise

Workhorse Group, Inc. Price and EPS Surprise
Workhorse Group, Inc. Price and EPS Surprise

Workhorse Group, Inc. price-eps-surprise | Workhorse Group, Inc. Quote

Factors Shaping Q4

Workhorse is likely to disappoint investors this earnings season. In September, the EV startup announced the recall of 41 C-1000 electric delivery vans that it had delivered to customers as the model didn’t meet Federal Motor Vehicle Safety Standards, post which the company suspended deliveries of the same. During the last earnings call, WKHS’s CEO admitted that the design of its flagship C-1000 electric delivery vans was neither robust nor profitable. In fact, Workhorse’s revenues turned negative in the last reported quarter amid suspension, recall and customer refunds related to the recall.

With the company having halted sales of its main product, Workhorse has no in-production vehicle model currently, which is likely to have weighed on the top line in the to-be-reported quarter. The company is anticipated to have completed the testing of its C-1000 in the fourth quarter, which is likely to have dented the bottom line.

Workhorse’s fourth-quarter results will reflect escalating operating costs. Selling, general & administrative (SG&A), and research & development (R&D) expenses for third-quarter 2021 totaled $10.6 million and $2.8 million, up from the year-ago period’s $5.9 million and $1.6 million, respectively. Soaring SG&A and R&D costs are set to further deteriorate fourth-quarter results, especially at a time when the company has no sealable product.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Workhorse this time around. 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. This is not the case here.

Earnings ESP: Workhorse has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate of loss per share is on par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Workhorse carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

A Look at Peers’ Q4 Results

Nikola NKLA released fourth-quarter 2021 results on Feb 24. It incurred an adjusted loss per share of 23 cents, narrower than the Zacks Consensus Estimate of 29 cents. During the quarter under review, Nikola commenced deliveries of Pre-Series Tre BEVs to customers and dealers. The company expects to begin series production of the Tre BEV on Mar 21.

Nikola’s fourth-quarter operating expenses totaled $162.7 million, up from $146.8 million witnessed in the comparable year-ago period. Looking forward, NKLA targets to deliver 300-500 production Tre BEVs to customers in 2022. As of Dec 31, 2021, Nikola had cash/cash equivalents and long-term debt of $497 million and $25 million, respectively.

Hyliion Holdings HYLN recorded fourth-quarter 2021 results on Feb 23. It incurred an adjusted loss per share of 17 cents, narrower than the Zacks Consensus Estimate of a loss of 27 cents. This Texas-based hybrid truck powertrain maker delivered its initial Hybrid eX powertrain systems in the fourth quarter of 2021 and began recognizing revenues. HYLN registered revenues of $200,000 in the quarter under discussion. R&D and SG&A expenses for the quarter totaled $17.4 million and $9.2 million, significantly higher than $4.5 million and $5.8 million recorded in the year-ago period, respectively.

Hyliion expects full-year 2022 operating expenses in the band of $135-$145 million, up from $93.5 million recorded in 2021 to fund the commercialization efforts of Hybrid eX and Hypertruck ERX. HYLN expects 2022 revenues in the band of $2-$3 million from Hybrid eX sales.

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