An Earnings Cheat Sheet For Tesla's Q1 Earnings

Tesla Motors Inc TSLA is scheduled to announce its first quarter financial results after the market closes on Wednesday. On Tuesday, Stifel analysts James Albertine and Maria Klioutcheva shared a preview of the results. So, let’s take a look into the figures.

For the fiscal first quarter of 2016, Stifel analysts are modeling a net loss of ($0.50) per share, which is at least $0.02 smaller than the Street’s estimate. On the other hand, the firm anticipates full year EPS of $0.83, well below consensus of $1.15.

Related Link: Blogger: Tesla Has Disclosed Material Information About Its Gigafactory To A Select Few

In early April, Tesla said it had seen first quarter deliveries of 14,820 units, 12,420 Model S units and 2,400 Model X units. This number stood well below the company’s prior guidance (and Stifel’s expectation) for 16,000 deliveries. But, while Model S deliveries fell short of expectations, Model X deliveries came in 900 above the firm’s projections.

“That said, as early delivery Model X transaction prices are likely higher than current Model S deliveries, the mix shift favoring the X could drive revenue outperformance vs. our model,” a report issued Tuesday explained.

Furthermore, the analysts noted that, even the recent recall of 2,700 units played in Tesla’s favor, as it proved how good the company’s customer service is.

The firm maintains a Buy rating and $325 price target on shares of the automaker.

What To Look For On Wednesday

Going back to Wednesday’s earnings call, Stifel analysts said they believe investors will focus on the company’s:

• Guidance for fiscal 2016 deliveries, which the experts anticipate will be maintained at 80K to 90K units
• Automotive gross margin targets for the end of 2016, which they expect will remain at 30 percent for the Model S and 25 percent for the Model X
• Expense ramp, which they envision will surge slightly in the first quarter, but expect to experience a 20 percent year-over-year surge over 2016.
• “Cash flow expectations/burn rate vs. recent quarters.”

Regarding free cash flow, some investors believe Tesla will need to raise funds though the capital markets this year. And, while Stifel analyst “agree this seems logical, given better than expected Model 3 demand perhaps necessitating a pull forward of production-related investments,” they believe the management teal will procrastinate the decision.

“We do hope TSLA provides more detail on the Gigafactory (production ramp, state/amount of ongoing investment, details related to key partnerships) and perhaps on Model 3 production line construction. We believe some still question TSLA's ability to scale production to meet Model 3 demand, so we would welcome any comfort/clarity management can provide in this regard,” the report concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.