Tesla Faces Challenges Ahead of Q3 Earnings Report
Tesla (TSLA) will release its third-quarter 2024 results on October 23, following the market’s close. The current Zacks Consensus Estimate for this quarter anticipates earnings of 58 cents per share and revenues of $25.57 billion.
Keep updated on quarterly earnings: Check the Zacks Earnings Calendar.
Tesla encountered difficulties in its second-quarter 2024 performance, with earnings dropping year-over-year and falling short of the Zacks Consensus Estimate. Historically, the company has experienced a trailing four-quarter average negative earnings surprise of 7.99%.
Tesla, Inc. Price and EPS Surprise
Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote
Revisions of Earnings Estimates for Tesla
In the last week, the Zacks Consensus Estimate for third-quarter earnings per share has risen by a cent. However, this estimate still indicates a 12.12% decline compared to last year. On a more positive note, revenue estimates suggest a year-over-year growth of 9.49%.
What to Expect in TSLA’s Q3 Results
Tesla achieved total global deliveries of 462,890 in the third quarter, split between 439,975 Model 3/Y vehicles and 22,915 other models. This represents increases of 6.4% year-over-year and 4.3% sequentially, but it fell short of our expectations of 471,559 units.
Our projections for automotive revenues predict a 13.1% increase annually, reaching around $22.19 billion. Nevertheless, rising production costs and significant price reductions across various models may impact profit margins. We anticipate a decrease in the automotive gross margin to 18.3%, down 40 basis points from the previous year.
On a brighter note, the Energy Generation and Storage business is thriving, particularly due to robust demand for products like the Megapack and Powerwall. This sector is not only lucrative but also has the highest profit margins. Energy storage deployment in the third quarter climbed to 6.9 GWh, reflecting a 73.3% year-over-year growth. We expect revenue from the Energy Generation/Storage segment to be approximately $2.17 billion, up 39.1% from last year. Revenues from Services/Other units are projected at $2.3 billion, representing a 6.5% growth.
Assessing Tesla’s Earnings Predictions
Our proven model does not provide a strong indication for an earnings beat for Tesla this quarter. An Earnings ESP (Expected Surprise Prediction) combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) generally increases the likelihood of a positive earnings surprise, but Tesla does not meet these criteria.
Earnings ESP: Tesla has an Earnings ESP of -1.28%. You can find the best stocks to buy or sell before their earnings reports with our Earnings ESP Filter.
Zacks Rank: Currently, Tesla holds a Zacks Rank of 2.
Other Stocks with Strong Earnings Potential
While a favorable earnings outcome for Tesla appears uncertain, some other automotive stocks are in a promising position. Allison Transmission Holdings, Inc. (ALSN), Cummins Inc. (CMI), and Rivian Automotive, Inc. (RIVN) match the criteria for potential earnings beats.
ALSN currently has an Earnings ESP of +1.20% and a Zacks Rank of 3. They are set to report their third-quarter results on October 29, with consensus estimates for earnings at $2 per share and revenues at $783.42 million. ALSN has consistently exceeded earnings estimates, averaging a surprise of 10.58% over the last four quarters.
CMI shows an Earnings ESP of +3.91% and also has a Zacks Rank of 3. Their earnings and revenues estimates for the third quarter, reporting on November 5, are $4.89 per share and $8.26 billion, respectively. CMI has achieved earnings beats in two of the past four quarters with an average surprise of 1.07%.
RIVN has an Earnings ESP of +0.38%, holding a Zacks Rank of 3 as well. They will report third-quarter results on November 7, with expectations of a loss of 88 cents per share and revenue of $1 billion. RIVN’s performance in terms of earnings beats has been mixed, achieving successes in two of the last four quarters.
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Cummins Inc. (CMI): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report
Rivian Automotive, Inc. (RIVN): Free Stock Analysis Report
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The views expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
