Tesla Earnings Preview: Still In The Black? (TSLA)
Tesla Motors (NASDAQ: TSLA), which is run and was co-founded by billionaire Elon Musk, is scheduled to report its third-quarter 2013 results Tuesday, November 5, after the markets close.
Among other things, investors will have an eye on the gross profit margin. It jumped from five percent in the first quarter to 13 percent in the second, and Musk has predicted another jump to 19 percent for the period that ended in September.
Analysts on average predict that Tesla will report that its revenue for the quarter surged about 967 percent year-over-year to $534.64 million. Earnings of $0.11 per share are also in the consensus forecast. That compares to a reported net loss of $0.92 per share in the comparable period of last year.
Note that the consensus earnings per share (EPS) estimate has crept up from $0.09 in the past 60 days. And Tesla topped consensus EPS estimates in the previous two quarters by 200 percent or more. The first quarter was the company's first profitable one.
The per-share profit in the second-quarter surprised analysts, and investors were pleased that Tesla said it would be profitable for the rest of the year and had targeted a 25 percent gross profit margin by the end of the year. The share price rose more than 14 percent following the second-quarter report.
Looking ahead to the current quarter, the forecast currently calls for sequential and year-over-year growth of both EPS and revenues. That consensus EPS estimate is unchanged from 60 days ago. The full-year forecast calls for $0.61 EPS and revenue almost 431 percent higher than a year ago.
Tesla Motors designs, manufactures, sells and services electric vehicles and electric vehicle powertrain components. The Tesla Roadster was the first fully electric sports car and the Model S is a fully electric luxury sedan. The company markets its cars via 42 Tesla stores and galleries, as well as over the Internet.
The company was founded in 2003, and its headquarters are in Palo Alto, California. It now has a market capitalization of more than $19 billion. Elon Musk has been chairman of the board since February 2004 and the chief executive officer of the company since October 2008.
Competitors include General Motors (NYSE: GE) and Toyota (NYSE: TM). The former posted better-than-expected third-quarter results last week. Analysts are looking for year-over-year earnings growth when the latter reports this week.
See also: GM Posts Upbeat Q3 Profit
During the three months that ended in September, Tesla launched its supercharging stations in Norway and announced expansion of its charging network in Europe, and it and opened an assembly plant in the Netherlands. The stock became a component of the Nasdaq 100 in July.
Telsa has a long-term earnings per share growth forecast of more than 18 percent. However, its operating margin and its return on equity are both in negative territory. And the forward earnings multiple is much higher than the price-to-earnings (P/E) ratios of the competitors mentioned above. The company does not offer a dividend.
The number of Tesla shares sold short, as of the October 15 settlement date, represents about 24 percent of the total float, though short interest has been slipping since the end of August. It would take less than two days to close out all of the short positions.
Half of the 14 analysts surveyed by Thomson/First Call who follow the stock recommend buying shares. The analysts' mean price target, or where they expect the stock to go, is more than four percent higher than the current share price. Note that shares traded higher than that as recently as a week ago.
Shares have retreated more than 16 percent from a multiyear high at the end of September, dropping below the 50-day moving average. The share price still is more than 358 percent higher year-to-date, and well above the 200-day moving average. Over the past six months, Tesla has outperformed not only the competitors mentioned above, but also the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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