Will Progress In Production Aid Tesla's (TSLA) Q1 Earnings?

Tesla, Inc. (NASDAQ:TSLA) is expected to report first-quarter earnings results on May 2, after the market closes. Last quarter, the electric carmaker delivered an earnings beat of 4.7%.

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%.

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

Why a Positive Surprise Likely

Our proven model shows that Tesla is likely to beat on earnings this quarter. That is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.

Zacks Earnings ESP: Tesla has an Earnings ESP of +1.14% as the Most Accurate estimate is pegged at a loss of $3.23, narrower than the Zacks Consensus Estimate of a loss of $3.26. A positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Tesla carries a Zacks Rank #3. This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

What’s Driving Better-Than-Expected Earnings?

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 the total vehicles produced, 24,728 were Model S and Model X while 9,766 were Model 3. The Model 3 output increased significantly on a sequential basis. However, the company missed the target of producing 2,500 Model 3s a week by the end of first-quarter 2018. Actually, 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.

The Zacks Consensus Estimate for Total Automotive revenues for the soon-to-be-released quarter is $2.73 billion. The company registered Total Automotive revenues of $2.70 in fourth-quarter 2017.

The Zacks Consensus Estimate for Energy, Generation and Storage revenues for the soon-to-be-released quarter is $392 million. The company registered Energy, Generation and Storage revenues of $298 million in fourth-quarter 2017.

The Zacks Consensus Estimate for Services and Other revenues for the soon-to-be-released quarter is $269 million. The company registered Services and Other revenues of $288 million in fourth-quarter 2017.

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:

BorgWarner Inc. (NYSE:BWA) has an Earnings ESP of +0.83% and a Zacks Rank #2 (Buy). Its first-quarter 2018 results are expected to be released on Apr 26. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

Cummins Inc. (NYSE:CMI) has an Earnings ESP of +0.44% and is a #2 Ranked player. Its first-quarter 2018 results are slated to be announced on May 1.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>