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Tesla Earnings: What to Look for from TSLA

  • Analysts estimate adjusted EPS of $0.86 vs. $0.23 in Q1 FY 2020.
  • Vehicle deliveries, already announced, rose dramatically in Q1 YOY.
  • Revenue growth is expected to rise rapidly compared to a year ago as Tesla boosts vehicle production.

Tesla Inc. (TSLA) is coming off a banner year in which it became the world’s most valuable automaker as its profits, revenue, and vehicle deliveries posted robust growth. But the electric vehicle maker is now facing fresh scrutiny after a number of fatal crashes involving its cars that either were using its autopilot steering system or may have been using it. The National Highway Traffic Safety Administration said in March that it was looking into the crashes.

Investors are likely to focus on how these safety issues may affect Tesla’s meteoric growth when it reports earnings on April 26, 2021 for Q1 FY 2021. Analysts are currently forecasting strong growth in both adjusted earnings per share (EPS) and revenue.

Investors are also interested in Tesla’s vehicle deliveries, a key metric gauging demand for the automaker’s vehicles as well as its ability to scale production. Tesla already issued its Q1 vehicle delivery numbers earlier this month. Total deliveries for the quarter came in above expectations and exhibited the fastest pace of growth since the second quarter of FY 2019.

Shares of Tesla have skyrocketed over the past year, dramatically outperforming the broader market. However, those shares have pulled back after reaching a peak in late January. Still, the stock has provided a total return of 391.5% over the past year, well above the S&P 500’s total return of 47.7%.

Source: TradingView.

The stock dropped after hitting a peak just prior to the automaker reporting Q4 FY 2020 earnings in late January, and has failed to fully recover. It was Tesla’s sixth straight quarter of positive earnings with adjusted EPS rising 94.6%, a slight deceleration from the previous quarter. Revenue expanded 45.5%, the fastest pace since Q2 FY 2019. Results were positively impacted by growth in volume and regulatory credit revenue, but price reductions on certain car models offset some of that positive impact.

In Q3 FY 2020, adjusted EPS rose 105.2% as Tesla posted its fifth consecutive quarter of positive earnings. Revenue for the quarter grew 39.2%, a turnaround from the prior quarter’s 5.0% decline amidst the height of the COVID-19 pandemic. Tesla noted that revenue growth was mainly driven by substantial increases in vehicle deliveries as well as growth in other parts of its business.

Analysts expect a significant acceleration in both earnings and revenue growth in Q1 FY 2021. Adjusted EPS is expected to rise 274.8% as revenue climbs 73.1%. It would mark the fastest pace of revenue growth since Q4 FY 2018. For full-year FY 2021, analysts are currently forecasting adjusted EPS to rise 114.0% as revenue increases 57.4%. It would be the third consecutive year of positive annual adjusted EPS and the fastest pace of revenue growth since FY 2018.

Tesla Key Stats
Q1 2021 (FY) Q1 2020 (FY) Q1 2019 (FY)
Adjusted Earnings Per Share ($) 0.86 (estimate) 0.23 -0.57
Revenue ($B) 10.4 (estimate) 6.0 4.5
Vehicle Deliveries 184,800 (actual) 88,400 65,300

Source: Visible Alpha; Tesla.

As mentioned above, investors are also interested in Tesla’s vehicle deliveries. The company’s primary business is making electric cars and it needs to continue expanding production in order to grow revenue and profits. The electric carmaker has made a number of key acquisitions in recent years, including German-based Grohmann Engineering GmbH and Perbix Machine Co. Inc., in order to increase its manufacturing efficiency and capacity. Increasing productive efficiency and capacity is important to justify Tesla’s high valuation. And while Tesla may currently lead the global electric vehicle market, other automakers are starting to eat into its market share. Last year, Volkswagen surpassed Tesla to become the top-selling all-electric vehicle maker in Europe, the world’s largest electric-car market.

Tesla has increased vehicle deliveries in every quarter over the last several years, except in Q2 FY 2020 when deliveries fell 4.3% amid the pandemic. But since that second quarter decline, growth in deliveries has been accelerating. Total deliveries rose 44.1% year over year (YOY) in Q3 FY 2020 and then by 63.2% YOY in Q4 FY 2020. In Q1 FY 2021, growth in vehicle deliveries accelerated to 109.0%, the fastest pace since Q2 FY 2019. For full-year FY 2021, analysts forecast total annual deliveries to rise 69.0% to 843,800 vehicles. That would be the fastest increase since FY 2018.

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