Tesla (TSLA) Delivers 5th Consecutive Earnings Beat in Q1

It was yet another blockbuster quarterly release from Tesla TSLA. Despite severe microchip crisis, the electric vehicle (EV) king posted record quarterly results once again on various key parameters including sales, deliveries and profits. Encouragingly, TSLA’s eccentric genius CEO Musk remains confident of 50% growth in annual deliveries in the foreseeable future, despite the industry odds.

Tesla reported first-quarter 2022 earnings of $3.22 a share, growing significantly from the year-ago figure of 93 cents and surpassing the Zacks Consensus Estimate of $2.15. This marked the fifth straight earnings beat for the company.

Tesla, Inc. Price, Consensus and EPS Surprise

Tesla, Inc. Price, Consensus and EPS Surprise

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

Higher-than-expected deliveries and automotive gross profit resulted in this outperformance. Total first-quarter 2022 deliveries of 310,048 units topped the Zacks Consensus Estimate of 298,495. Automotive gross profit came in at $5,539 million, which outpaced the consensus mark of $4,113 million. Also, revenues from automotive regulatory credits totaled $679 million, breezing past the consensus mark of $301 million and rising 31% on a year-over-year basis.

Total revenues came in at $18,756 million, beating the consensus mark of $17,276 million. The top line also witnessed year-over-year growth of 80.5%. Importantly, the EV giant reported an automotive gross margin of 32.9% and overall gross margin of 29.1% for the quarter. Further, operating margin came in at 19.2%.

Key Takeaways

Production and delivery totaled 305,407 and 310,048 vehicles, reflecting a year-over-year jump of 69% and 68%, respectively. First-quarter 2022 marked the seventh consecutive quarter of ground-breaking deliveries by the world's most valuable automaker. The Model 3/Y registered production and deliveries of 291,189 and 295,324 vehicles, marking year-over-year growth of 61% and 62%, respectively. Production and delivery of the Model S/X totaled 14,218 and 14,724 units, respectively, for the quarter under review.

Total automotive revenues of $16,861 topped the consensus mark of $15,080 million and surged 87% year over year. The figure also included $679 million from the sale of regulatory credits for electric vehicles, which rose 31% year over year. Automotive gross margin came in at 32.9%, expanding 636 basis points from first-quarter 2021.

Energy generation and storage revenues came in at $616 million for first-quarter 2022 compared with the year-ago period’s $494 million. Services and other revenues were up 43.2% year over year to $1,279 million.

Operating expenses totaled $1,857 million for the reported quarter, up from $1,621 million incurred in the corresponding period of 2021.

Financials

Tesla had cash and cash equivalents of $17,505 million as of Mar 31, 2022 compared with $17,576 million on Dec 31, 2021. Net cash provided by operating activities amounted to $3,995 million for first-quarter 2022, up 143.4% year on year. Its capital expenditure totaled $1,767 million, up from the $1,348 million recorded in first-quarter 2021.

Tesla generated free cash flow of $2,228 million during the quarter, up a whopping 660% year on year. Long-term debt and finance leases — net of current portion on Dec 31, 2021 — totaled $3,153 million, down from $5,245 million on Dec 31, 2021.

Zacks Rank & Key Picks

Tesla currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the auto space include AutoNation AN, Group 1 Automotive GPI and Penske Automotive PAG. All three companies are noteworthy names in the auto retail industry. While AN flaunts a Zacks Rank #1 (Strong Buy), GPI and PAG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoNation’s strong footprint, large dealer network, enhanced digital solutions, aggressive store expansion efforts and brand extension strategy are praiseworthy. Acquisitions of Peacock Automotive Group and Priority 1 have buoyed AutoNation’s portfolio. A strong liquidity profile and investor-friendly moves instill optimism. The Zacks Consensus Estimate for AutoNation’s 2022 earnings and sales implies year-over-year growth of 11.1% and 5.2%, respectively.

Group 1’s acquisition of dealerships and franchises to expand and optimize its portfolio is likely to boost the firm’s prospects. In 2021, Group 1 completed transactions representing $2.5 billion of acquired revenues. The company’s frequent dividend hikes and robust share buyback program boost shareholder confidence. GPI’s online retailing initiative — the AcceleRide platform —is also buoying prospects. The Zacks Consensus Estimate for Group 1’s 2022 earnings and sales implies year-over-year growth of 10% and 17.5%, respectively.

Penske is riding high on strategic acquisitions. It has become the largest dealership group for Freightliner in North America with the Warner Truck Centers buyout. Acquisitions of Kansas City Freightliner and McCoy are also boosting Penske’s top line. The Penske Transportation Solutions joint venture, in which PAG holds a 28.9% stake, is also driving the firm’s growth. Management is also committed to maximize shareholder value via dividends and buybacks. The Zacks Consensus Estimate for Penske’s 2022 and 2023 sales implies year-over-year growth of 4.5% and 1.6%, respectively.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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