Will Incentives & High Input Costs Offset Tesla's Q3 Delivery Growth?
Tesla TSLA is slated to release third-quarter 2024 results on Oct. 23, after the closing bell. The results will primarily center around the company’s vehicle deliveries and profit margins.
Stay up-to-date with the quarterly releases: See Zacks Earnings Calendar.
TSLA missed earnings estimates in each of the trailing four quarters, the average negative surprise being 7.99%. Before we delve into the factors that are set to shape its upcoming results, here’s a snapshot of its second-quarter 2024 earnings report.
(Also read: A Comprehensive Look at Tesla's Q3 Earnings Expectations)
Tesla’s Q2 Highlights
In the second quarter of 2024, the electric vehicle (EV) titan reported earnings per share of 52 cents, which declined from the year-ago figure of 91 cents and also missed the Zacks Consensus Estimate of 62 cents. Total revenues came in at $25.5 billion, witnessing year-over-year growth of 2%. The top line also topped the consensus mark of $25.1 billion.
Tesla’s second-quarter production totaled 410,831 units (386,576 Model 3/Y and 24,255 other models), down 14.1% year over year. The company delivered 443,956 vehicles, reflecting a year-over-year decline of 5%. The Model 3/Y registered deliveries of 422,405 vehicles, down 5.5% from the year-ago period. Deliveries of the other models totaled 21,551 units, up 12.1% year over year.
Tesla had cash/cash equivalents of $30.7 billion as of June 30, 2024. Long-term debt and finance leases, net of the current portion, totaled $5.48 billion, up from $2.86 billion as of Dec. 31, 2023. The company generated FCF of $1.34 billion during the reported quarter, which rose from $1 billion generated in the year-ago period.
Q3 Delivery Growth to Aid TSLA Amid Shrinking Margins
The company delivered 462,890 units during the third quarter. After experiencing two consecutive quarters of a year-over-year decline, Tesla’s deliveries finally rose in the third quarter. The delivery numbers rose 6.4% and 4.3% on a yearly and sequential basis, respectively. However, it missed our model projection of 471,559 units.
Tesla’s Model 3 and Y are the company’s most successful EVs, accounting for most of its sales. During the quarter, Tesla delivered 439,975 of those, up 5% year over year. Deliveries of other models rose to 22,915 units, up 43.4% year over year.
Fueled by the delivery surge, our forecasts imply 13.1% year-over-year growth in automotive revenues, projecting the metric to reach $22.19 billion.
However, high production costs and aggressive price cuts across models are weighing on the company’s margins. We project the cost of automotive sales to rise more than 13% to around $18.1 billion. Automotive gross margin (excluding leasing) is projected at 17.7%, down from 18.2% recorded in the year-ago period and 17.8% in the second quarter of 2024.
Overall Earnings & Revenue Projections of Tesla
Our proven model does not conclusively predict an earnings beat for Tesla, as it doesn’t have the right combination of a positive Earnings ESP and a favorable Zacks Rank. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company has an Earnings ESP of -1.28% and carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 58 cents per share, indicating a contraction of 12.12% on a year-over-year basis. The consensus mark for EPS has moved north by a penny over the past seven days. The Zacks Consensus Estimate of $25.57 billion for sales indicates a 9.49% rise on a year-over-year basis.
Stocks With Favorable Combination
While an earnings beat looks uncertain for Tesla, Allison Transmission Holdings, Inc. ALSN, Cummins Inc. CMI and Rivian Automotive, Inc. RIVN are some automotive players, that, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported.
ALSN has an Earnings ESP of +1.20% and a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company is slated to report third-quarter 2024 results on Oct. 29. The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $2 per share and $786.91 million, respectively. ALSN beat earnings estimates in each of the trailing four quarters, with the average surprise being 10.58%.
CMI has an Earnings ESP of +3.91% and a Zacks Rank #3 at present. The company is slated to report third-quarter 2024 results on Nov. 5. The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.89 per share and $8.28 billion, respectively. CMI beat earnings estimates in two of the trailing four quarters and missed twice, with the average surprise being 1.07%.
RIVN has an Earnings ESP of +0.38% and a Zacks Rank #3 at present. The company is slated to report third-quarter 2024 results on Nov. 7. The Zacks Consensus Estimate for Rivian’s to-be-reported quarter’s loss per share and revenues is pegged at 88 cents and $968.3 billion, respectively. RIVN beat earnings estimates in two of the trailing four quarters and missed twice, with the average negative surprise being 0.42%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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