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Tesla (TSLA) to Post Solid Q1 Earnings on Robust Delivery Count

Tesla TSLA is set to release first-quarter 2021 results on Apr 26, after the closing bell. The electric vehicle (EV) manufacturer’s upcoming results will reflect the favorable impact of rising Model 3/Y deliveries, which form a major chunk of the automaker’s overall deliveries.

(Also read: Things to Note Ahead of Tesla's Q1 Earnings Release)

Q4 Highlights

In the last reported quarter, Tesla posted earnings of 80 cents per share, missing the Zacks Consensus Estimate of 90 cents. Lower-than-expected automotive gross profit resulted in the underperformance. Nonetheless, the bottom line compared favorably with the year-ago earnings of 43 cents a share. Tesla posted profit for the sixth consecutive quarter. Importantly, the firm posted its first annual net profit in 2020. Total revenues came in at $10,744 million, surpassing the consensus mark of $10,129 million. The top line also witnessed year-over-year growth of 45.5%.

Tesla had cash and cash equivalents of $19,384 million as of Dec 31, 2020 compared with $6,268 million in the corresponding period of 2019. Importantly, the firm generated free cash flow of $1,868 million during the fourth-quarter 2020.

During the December-end quarter, Tesla reported delivery and production of 180,667 and 179,757 vehicles, reflecting a year-over-year increase of 61% and 71%, respectively. The company reported Model 3/Y production and deliveries of 163,660 and 161,701 units, pointing to a year-over-year increase of 88% and 75%, respectively.

Production & Deliveries in Q1

With the Model 3 sedan being its flagship vehicle, Tesla has established itself as a leader in the EV segment. Solid performance and impressive design of its products are expected to have ramped up sales volumes during the quarter under review. Being the first mass-market electric car in North America and Europe, Model 3 is one of the best-selling vehicles. The car’s market-leading safety, performance and impressive specs made it a huge success. Also, ramped up production and deliveries of Model Y vehicles are likely to have buoyed the automaker’s earnings during the quarter under review.

Tesla reported stellar first-quarter 2021 production and deliveries, thanks to increasing popularity of green vehicles, preference for personal mobility, easier credit conditions, and gradual economic recovery buoyed by accelerated vaccination drive as well as fiscal stimulus.

The EV king registered production and deliveries of 180,338 and 184,800 vehicles, respectively, in the December-end period, way higher than 102,672 units produced and 88,496 units delivered in the corresponding quarter of 2020. The delivery count marks a 2.3% and 109% jump on a sequential and yearly basis, respectively. Defying the global chip crunch that the auto industry has been battling, it was able to boost Model 3/Y production and deliveries. Model 3/Y deliveries totaled 182,780 units in first-quarter 2021, reflecting massive growth from 76,266 units delivered in the comparable year-ago period.

Importantly, Model Y was the primary catalyst for Tesla's vehicle sales growth in the quarter. The company has been benefiting from high sales in China — the world’s leading EV market. Tesla stated that it was encouraged by strong reception of the Model Y in China and noted that it was quickly progressing to full production capacity.

Overall Earnings & Revenue Projections for Q1

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 79 cents, indicating a massive jump from 2 cents per share posted in the prior-year period. The Zacks Consensus Estimate of more than $9.9 million for sales indicates a 65.7% jump on a year-over-year basis.

All in all, robust Model 3/Y demand, significant Shanghai Gigafactory progress, and solid performance of the energy and storage business are likely to have aided the company’s performance during the to-be-reported quarter.

Tesla — which shares space with auto biggies including General Motors GMFord F and Toyota TM — currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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