Tesla (TSLA) to Retain Earnings Beat Streak in Q1 Amid Chip Woes

Tesla TSLA is set to release first-quarter 2022 results on Apr 20, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $2.16 per share and $17.29 billion, respectively.

The electric vehicle (EV) king surpassed the Zacks Consensus Estimate for earnings in the last reported quarter on higher-than-expected automotive gross profit. The top and bottom lines witnessed year-over-year growth of 65% and a whopping 218%, respectively. Importantly, fourth-quarter 2021 gross margin — excluding credits — came in at 29.2%, an all-time record high.

Over the trailing four quarters, Tesla beat the Zacks Consensus Estimate on all occasions, with the average being 33.3%. This is depicted in the graph below:

Tesla, Inc. Price and EPS Surprise

Tesla, Inc. Price and EPS Surprise

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

Estimate Revisions

The Zacks Consensus Estimate for first-quarter earnings per share has moved 15 cents north in the past 30 days. The bottom-line estimate implies a year-over-year surge of 132.3%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 66.4%.

Earnings Whispers

Our proven model predicts an earnings beat for Tesla this time around as well. 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.

Earnings ESP: Tesla has an Earnings ESP of +10.21%. This is because the Most Accurate Estimate of $2.38 per share is pegged 22 cents higher than 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: Tesla currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Courtesy of preference for personal mobility and the soaring popularity of green vehicles, demand for Tesla cars has been on the rise. Consequently, Tesla delivered 310,048 units in first-quarter 2022, surging 67.7% on a year-over-year basis. Deliveries also inched up 0.5% from the fourth-quarter 2021 level. In fact, first-quarter 2022 marked the seventh consecutive quarter of record deliveries by the world's most valuable automaker. What’s more, the remarkable numbers were attained despite several challenges including escalating supply chain snafus and COVID-19 surge in China.

Increasing demand for Models 3 and Y, which form a major chunk of the automaker’s overall deliveries, can be attributed to Tesla's robust vehicle sales for the quarter. For the quarter in discussion, the Model 3/Y division registered deliveries of 295,324 vehicles, beating the Zacks Consensus Estimate of 286,883 units and increasing significantly from the delivery of 182,847 units in the corresponding quarter of 2021. Resultantly, the Zacks Consensus Estimate for automotive revenues for the quarter under discussion is pegged at $14,734 million, calling for a year-over-year jump of 69.3%.

Solar and storage deployments are also expected to have witnessed exponential growth during the quarter, aided by the company’s Solar Roof and Powerwall products. The consensus mark for energy generation and storage revenues is pegged at $719 million, suggesting an increase from the year-ago level of $494 million. The same for revenues from Automotive Leasing & Services and Others is pegged at $369 million and $1,103 million, indicating year-over-year growth of 24.2% and 23.5%, respectively.

Thus, robust demand for Model 3/Y and stellar performance of the solar arm are likely to have fueled Tesla’s earnings in the to-be-reported quarter.

Other Stocks With Favorable Combination

Here are some other players from the auto space, which, according to our model, also have the right combination of elements to post an earnings beat for the quarter to be reported:

Allison Transmission ALSN has an Earnings ESP of +10.35% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 27.

The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with an average of 13.4%.

LKQ Corp LKQ has an Earnings ESP of +0.37% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 28.

The Zacks Consensus Estimate for LKQ’s to-be-reported quarter’s earnings and revenues is pegged at 91 cents per share and $3.28 billion, respectively. Encouragingly, LKQ surpassed earnings estimates in the last four quarters, with an average of 33.9%.

Cummins, Inc. CMI has an Earnings ESP of +0.09% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on May 3.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.59 per share and $6.06 billion, respectively. Over the trailing four quarters, CMI surpassed earnings estimates twice for as many misses, with an average surprise of 0.5%.

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