Tesla (TSLA) To Report Q1 Earnings: What's In The Cards?

Tesla, Inc. (NASDAQ:TSLA) is expected to report first-quarter earnings results on May 2, after the market closes. In the last reported quarter, the electric carmaker delivered earnings beat of 4.7%. The long-term expected earnings growth for the company (over three to five years) is currently pegged at 25%.

In the trailing four quarters, the company missed estimates twice and beat on the other two, with an average negative earnings surprise of 31.2%. Year to date, shares of Tesla have declined 5.6%.

Let’s see, how things are shaping up for this announcement.

Tesla, Inc. Price and EPS Surprise

Factors Influencing This Quarter

In first-quarter 2018, Tesla produced 34,494 vehicles, up 40% from fourth-quarter 2017. This happens to be the most productive quarter in the history of the company. Out of the total vehicles produced, 24,728 were Model S and Model X while 9,766 were mass-market Model 3 sedans. By the end of first-quarter 2018, production of Model 3 rose considerably on a sequential basis, even though the company missed the target of producing 2,500 units per week. In reality, it produced 2020 Model 3 cars over the last seven days of the quarter. Despite the production-target miss, the first-quarter 2018 performance of Tesla looks encouraging.

Although first-quarter revenues are anticipated to increase, high costs associated with the company’s Model 3 ramp up are likely to have some negative impact on its results. In fact, a higher mix of Model 3s in the company’s automotive sales mix may have some negative impact on the gross margin in the short-run.

Earnings Whispers

Our proven model does not predict earnings beat for Tesla this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks Earnings ESP: Tesla’ Earnings ESP is -8.67% as the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $3.66 and $3.37, respectively.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Tesla currently carries a Zacks Rank #3.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering from the same space with the right combination of elements to outpace earnings estimates this time around:

Meritor, Inc. (NYSE:MTOR) has an Earnings ESP of +0.39% and a Zacks Rank of 3. It is expected to report first-quarter 2018 results on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) has an Earnings ESP of +3.45% and a Zacks Rank of 3. It will report first-quarter 2018 results on May 4.

Magna International Inc. (NYSE:MGA) has an Earnings ESP of +1.30% and a Zacks Rank of 3. It is expected to report first-quarter 2018 results on May 10.

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