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Tesla (TSLA) to Report Q3 Earnings: Will it Disappoint?

Tesla Inc. TSLA is set to report third-quarter 2017 results after market close on Nov 1. Last quarter, the electric car maker saw an earnings beat of 31.4%.

In the trailing four quarters, the company beat and missed estimates twice each, resulting in an average negative earnings surprise of 77.4%.
Let us see, how things are shaping up for this announcement.

Tesla Inc. Price and EPS Surprise

Tesla Inc. Price and EPS Surprise | Tesla Inc. Quote

Factors Influencing this Quarter

Tesla has not been able to meet third-quarter 2017 production goals of the new Model 3 sedan. During the quarter, the company delivered only 220 Model 3s and produced 260, which fell short of the production target of 1,500. This indicates that the production has not been as smooth as anticipated.

However, during the quarter ending Sep 30, Tesla delivered 26,150 vehicles, reflecting a rise of 4.5% year over year and 17.7% sequentially.
The rise was due to record deliveries of Model S and Model X during the quarter.

In July 2017, the company started producing Model 3, which comes at half the starting price of Model S. In its second-quarter earnings results Tesla had said that it would aims at achieving a run rate of 5,000 and 10,000 units per week in 2017 and 2018, respectively.

However, as a result of the initial target miss, customers have already started doubting if the company will manage to achieve its target in the future.

Earnings Whispers

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

Zacks ESP: Tesla has an Earnings ESP of -4.49% as the Most Accurate estimate of a loss of $2.56 is wider than the Zacks Consensus Estimate of a loss of $2.45. 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 #4 (Sell).

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

Stocks to Consider

A few companies with the right combination of elements to come up with an earnings beat this quarter are:

Horizon Global Corporation HZN has an Earnings ESP of +5.82% and a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is expected to report third-quarter 2017 results on Oct 31.

Meritor, Inc. MTOR has an Earnings ESP of +4.26% and a Zacks Rank of 1. The company is expected to release fourth-quarter 2017 results on Nov 15.

American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +3.99% and a Zacks Rank 3. The company is expected to release third-quarter 2017 results on Nov 3.

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Tesla Inc. (TSLA): Free Stock Analysis Report
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Meritor, Inc. (MTOR): Free Stock Analysis Report
Horizon Global Corporation (HZN): Free Stock Analysis Report
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