It’s earnings time again for one of the market’s beloved momentum stocks, and on Wednesday after the closing bell, Tesla Motors Inc (NASDAQ:TSLA) will do its big reveal for the fourth quarter and full year.
According to analysts polled by Thomson Reuters, Tesla earnings should include a significant year-over-year increase in revenue, but a decline in adjusted earnings per share compared to the same quarter last year.
Wall Street is anticipating a top line of $1.2 billion in the final quarter of the year, which would be up big from the $761.3 million in revenue the company reported in the fourth quarter of 2013.
As for Tesla earnings net profit, that too is expected to increase, with consensus estimates calling for $46.1 million during the quarter, up from $45.9 million a year ago. The adjusted bottom-line figure is forecast to come in at 31 cents per share, which would be a 2-cent drop from the 33 cents per share the company earned in the fourth quarter last year.
Of course, Tesla earnings also will be tallied for the full year, and here the consensus estimate is for Tesla to drive in with revenue of $3.7 billion, which would be an acceleration of nearly 50% from the $2.5 billion top line the company saw in 2013. Tesla net profit for the year is estimated to be $80.1 million, down sharply from $103.6 million in net profit last year.
Full-year EPS estimates call for a showing of 57 cents per share. Here again, this is down from the 78 cents per share Elon Musk and company earned the prior year.
While Tesla earnings this year won’t match up to last year in terms of net profit and EPS, this is nothing unexpected for people who watch TSLA stock. The company has been spending like an Internet startup of late, but that spending is aimed squarely at developing the new Model X crossover, as well as the entry-level (and eminently more affordable) Model 3 electric vehicle.
Then there are the increased costs associated with the build up of Tesla’s rapid-charge stations, or what the company calls its Supercharger network.
I suspect that if Tesla earnings meet the quarterly and full-year revenue and EPS estimates, traders will let out a collective yawn. I say that because many Tesla bulls (of which I am one) are expecting to see a lot better metrics than the collective consensus.
One Tesla bull expressing just that is UBS analyst Colin Langan. On Monday, Langan wrote that he expected Tesla earnings will come in at 34 cents per share, above the consensus of 31 cents per share. Langan based that upbeat forecast for Tesla earnings in part on a total of 33,000 cars delivered for the full year. That number actually is down from the original estimate by Elon Musk and company for 35,000 Model S deliveries in 2011.
The reason for Langan’s updated delivery figures are due to Tesla’s third-quarter metric of 7,200 Model S vehicles produced. That fell short of the 9,000 vehicle figure originally tapped by Tesla. Musk and company did revise the full-year figure down to 33,000, so that’s definitely the number to at least meet in for the full year when the data is released on Wednesday.
Langan also apparently seems confident the costs associated with operations will translate into that EPS beat.
For TSLA stock, an earnings beat would be a welcome relief from the recent selloff in the shares. Consider that over the past half year, this once-darling of momentum plays has seen its momentum fizzle. TSLA stock has sunk 10.2% in the last three months and by 16% in the last six months.
Already in this young 2015, shares are down nearly 2.3%.
What I am really interested in from an investing standpoint is how the market reacts to whatever Tesla says on Wednesday evening’s conference call. Can the numbers — along with what Elon Musk says about key concerns such as deliveries in 2015, the Model X release date, the Model 3 progress and the company’s production efficiency — be the jolt Tesla needs to reignite the lost momentum that made trading TSLA stock so electric?
We’ll all soon find out.
As of this writing, Jim Woods was long TSLA.
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