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Factors Shaping the Fate of Nikola (NKLA) This Earnings Season

Nikola Corporation’s NKLA third-quarter 2021 results are scheduled to be out on Nov 4, before the opening bell. The Zacks Consensus Estimate for the quarter’s loss is pegged at 26 cents per share.

In the last reported quarter, Nikola incurred loss per share of 36 cents, narrower than the Zacks Consensus Estimate of a loss of 48 cents.

Over the preceding four quarters, Nikola surpassed the Zacks Consensus Estimate on all occasions, the average surprise being 27.9%. This is depicted in the chart below:

Nikola Corporation Price and EPS Surprise

Nikola Corporation price-eps-surprise | Nikola Corporation Quote

Trend in Estimate Revisions   

The Zacks Consensus Estimate for Nikola’s third-quarter loss per share has widened by a penny in the past 60 days. Nonetheless, this compares favorably with the year-ago quarter’s loss of 31 cents per share.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Nikola this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat, which is not the case here. This has been elaborated below.

Earnings ESP: Nikola has an Earnings ESP of +0.00%. This is because the Most Accurate Estimate is pegged at par with the estimate loss. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Nikola, peers of which include Daimler AG DDAIF and PACCAR Inc. PCAR, carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

During the quarter under review, Nikola expanded its sales and service network by adding 51 locations across the United States, bringing its total number of U.S. sales and service locations to 116. The company also scaled up its dealership network for its Class 8 truck sales and service coverage with the addition of Alta Equipment Group and Quinn Company. In September, Nikola teamed up with Bosch Group companies allowing the former to utilize fuel-cell power modules using the technology licensed from Bosch, providing Nikola vehicles cost and performance advantages.

During the quarter under discussion, Nikola and Iveco, the truck and bus business of CNH Industrial CNHI, inaugurated the joint-venture (JV) manufacturing facility in Ulm, Germany, dedicated to the development of the Nikola Tre electric heavy-duty trucks. The first Nikola Tre models produced at the facility, which is ready to start production by year end, will be deployed for select customers in the United States in 2022. The companies also announced their collaboration for the testing and subsequent implementation of heavy-duty EVs and charging infrastructure at the Port of Hamburg during 2022. The companies signed a Memorandum of Understanding (MOU) with the Hamburg Port Authority, which states their intent to partner in two phases involving the delivery of 25 Nikola Tre BEVs to the Port throughout 2022, making the Port of Hamburg its pilot customer in Europe.

The above-mentioned series of developments are crucial for advancing the future of zero-emission transportation and building a hydrogen economy. This is likely to have been beneficial for Nikola’s third-quarter performance.

However, Nikola, currently in the pre-revenue stage, has been incurring elevated capital expenditure and R&D costs, in a bid to develop and test state-of-the-art technologies, as well as add new sales and service locations. This is expected to have dented the company’s third-quarter margins.

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