Zacks analyst blog spotlights Tesla, Driven Brand Holdings and Allison Transmission

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For immediate release

Chicago, IL – July 15, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: Tesla TSLA, Driven Brand Holdings DRVN and Allison Transmission ALSN.

Here are highlights from Thursday’s analyst blog:

How should Tesla (TSLA) fare on Q2 earnings next week?

You’re here is set to kick off the second-quarter earnings season for the Zacks Auto-Tires-Trucks segment next week. The electric vehicle (EV) giant will release its quarterly results on July 20, after the closing bell. Zacks’ consensus estimate for earnings and revenue in the quarter to report is set at $1.91 per share and $17.48 billion, respectively.

Tesla beat Zacks’ consensus estimate for earnings in the last quarter reported on higher-than-expected auto shipments and gross profit. The top and bottom lines saw year-over-year growth of 80.5% and a whopping 246%, respectively. Over the past four quarters, Tesla has beaten the Zacks consensus estimate on all occasions, averaging 41.3%.

But will the company also be able to maintain its beat streak this time around? With investors keeping their fingers crossed, an earnings beatdown doesn’t seem too likely for Tesla this time around.

Estimated revisions

Zacks’ consensus estimate for second-quarter earnings per share has moved south 2 cents in the past seven days. The final estimate, however, implies a year-over-year increase of 31.7%. Zacks’ consensus estimate for quarterly revenue suggests a 46.2% year-over-year increase.

Things to note

The auto industry is in the grip of a severe microchip crisis – a byproduct of the COVID pandemic that has only worsened with the Russian-Ukrainian war. Shortages of semiconductors and other components have impacted Tesla’s production volumes. Additionally, a resurgence in coronavirus cases in China had forced the company to temporarily shut down its Shanghai gigafactory for much of the start of the quarter.

Shanghai gigafactory operations were suspended for three weeks in April. According to the China Passenger Car Association (CPCA), the plant produced just 10,757 vehicles during the month, marking a 97.7% drop from March levels. Tesla managed to gradually ramp up operations and produced 33,554 units at the Shanghai plant in May. Thanks to round-the-clock production, Tesla’s production in June topped 70,000 units in Shanghai. June was the month with the highest vehicle production in Tesla’s history.

Nonetheless, Tesla reported low overall deliveries for the April-June period, ending the streak of record quarterly deliveries. Second-quarter deliveries totaled 254,695 units (including 16,162 Model S/X units and 238,533 Model 3/Y units), down from 310,048 vehicles delivered in the first quarter of 2022, marking a two-year streak of quarterly earnings. Deliveries also missed the Zacks consensus estimate of 303,532 units. Deliveries lower than forecast are likely to have an impact on the results.

In addition, high raw material costs and logistical constraints are also expected to remain pain points. But on a more positive note, Tesla has benefited from the increase in the average selling price (ASP) of vehicles as it passes the burden of escalating input costs onto consumers through price hikes on its models. . Thanks to the rise in ASP, we believe that Tesla could have offset most of the lost production and inflationary pressure from raw materials in the second quarter.

Tesla’s segment revenue is also expected to see growth in solar and storage deployments in the quarter, helped by the company’s Solar Roof and Powerwall products. The consensus mark for energy generation and storage revenue is pegged at $893 million, suggesting a sequential and annual increase of 45% and 11.5%, respectively.

Overall, while higher Tesla vehicle prices and strong performance from the solar arm are likely to have helped Tesla’s earnings in the quarter ahead, high raw material costs and the shutdown of operations at the Shanghai plant for most of April may have played spoilsport.

What does our model say?

Our proven model does not conclusively predict an earnings beat for Tesla this time around. The combination of a positive Earnings ESP and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating Earnings. That’s not the case here.

ESP Earnings: Tesla has an ESP on gains of -14.63%. Indeed, the most accurate estimate of $1.63 per share is 28 cents higher than Zacks’ consensus estimate. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Zacks Rank: Tesla currently carries a Zacks rank of 3. You can see the full list of today’s Zacks #1 Rank stocks here.

Actions with favorable combination

Here are a few players in the automotive space that, according to our model, have the right combination of elements to post a pace of earnings for the reportable quarter:

Motivated brand assets has an earnings ESP of +14.45% and a Zacks rank of No. 3. The stock is set to report Q2 2022 results on July 27.

Zacks’ consensus estimate for Driven’s reportable quarter earnings and revenue is pegged at 29 cents per share and $486 million, respectively. Encouragingly, DRVN has exceeded earnings estimates for the past four quarters, averaging 30.1%.

Allison Transmission has a +3.87% win ESP and a #3 Zacks rank. The stock is expected to report its second-quarter 2022 results on August 3.

Zacks’ consensus estimate for Allison’s reportable quarter earnings and revenue is set at $1.33 per share and $695 million, respectively. Encouragingly, ALSN has exceeded earnings estimates for the past four quarters, averaging 11.7%.

Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.

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Tesla, Inc. (TSLA): Free Stock Analysis Report

Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report

Driven Brands Holdings Inc. (DRVN): Free Stock Analysis Report

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