Tesla Motors, Inc.
) is set to report second-quarter 2014 results on Jul 31. Last
quarter, this electric carmaker had posted a -60.00% surprise. Let
us see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
Tesla started deliveries of Model S in China in Apr 2014. The
company also launched the right-hand version of Model S in Britain
in Jun 2014. These moves should increase the company's demand.
However, Tesla is facing a shortage of lithium-ion battery
cells, due to which it is unable to meet the rising demand for
Model S. The company expects vehicle deliveries to increase to
7,500 in the second quarter of 2014 from 6,457 cars in the first
Meanwhile, production volume is expected to increase 13-19% from
the first quarter of 2014 to 8,500-9,000 cars. However, deliveries
are expected to be lower than production due to increase in the
number of vehicles in transit to Europe and Asia. Further,
operating expenses are expected to increase in the second quarter
The company believes that research and development expenses will
rise 30% while selling, general and administrative expenses will
increase 15% during the quarter, both on a sequential basis. As a
result, Tesla expects to record a marginal adjusted profit in the
second quarter of 2014.
Our proven model does not conclusively show that Tesla is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Tesla has an Earnings ESP of 0.00%. That is because the Most
Accurate estimate and the Zacks Consensus Estimate both currently
stand at 24 cents per share.
Tesla currently has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2
or 3 increases the predictive power of ESP, the company's ESP of
0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies in the automobile sector you may want to
consider as our model shows these have the right combination of
elements to post an earnings beat this quarter:
Meritor, Inc. (
) has an earnings ESP of +26.67% and a Zacks Rank #2 (Buy). The
company will report second-quarter earnings on Jul 31, 2014.
BorgWarner Inc. (
), with an earnings ESP of +1.15% and a Zacks Rank #2, will post
second-quarter earnings on Jul 31, 2014.
American Axle & Manufacturing Holdings Inc. (
) has an earnings ESP of +8.45% and a Zacks Rank #2. The company
will release second-quarter financial results on Aug 1, 2014.
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