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Can Rise in Vehicle Delivery Aid Tesla (TSLA) in Q2 Earnings?

Zacks Equity Research

Tesla, Inc. TSLA is scheduled to report second-quarter 2019 earnings on Jul 24, after the market closes. In the last reported quarter, this electric carmaker delivered a negative earnings surprise.

In the trailing four quarters, the company missed estimates thrice and beat once.

In the past six months, shares of Tesla have underperformed the industry it belongs to. Over this period, shares of the company have dipped 16.1% against the industry’s growth of 1.5%.

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

Factors Influencing This Quarter

In second-quarter 2019, Tesla reported a record number of deliveries. Notably, in the quarter, the company posted record 95,200 Model 3 sedan deliveries. However, during the same time frame, it delivered total 17,650 Model S sedans and Model X crossovers, down 21% year over year. The record Model 3 sedan delivery is aiding the company to overcome waning Model S sales.

Tesla made incredible progress by efficiently organizing its global logistics. The company made improvements in cost efficiencies, working capital and delivery operations.

The Zacks Consensus Estimate for total automotive revenues for the soon-to-be-released quarter is pegged at $5.5 billion. The company registered total automotive revenues of $3.7 billion in first-quarter 2019.

Tesla, Inc. Price and EPS Surprise


Tesla, Inc. Price and EPS Surprise

Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote

Earnings Whispers

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

Earnings ESP: Tesla has an Earnings ESP of -33.10%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3. This combined with its Earnings ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are a few auto stocks worth considering, comprising the right combination of elements to come up with an earnings beat this time around:

Group 1 Automotive, Inc GPI presently has an Earnings ESP of +0.73% and a Zacks Rank #3. It is slated to release second-quarter 2019 results on Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cummins Inc CMI currently has an Earnings ESP of +3.67% and a Zacks Rank of 3. It is slated to release second-quarter 2019 results on Jul 30.

Penske Automotive Group, Inc PAG presently has an Earnings ESP of +0.42% and a Zacks Rank of 3. It is slated to release second-quarter 2019 results on Jul 30.

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