Tesla Motors Inc (NASDAQ:TSLA) is scheduled to report its first quarter earnings on Wednesday, and analysts are updating their estimates ahead of that report. In a report dated May 2, 2014, Stifel analysts James Albertine and Lucy Webster say they’ve reduced their earnings per share estimate from 26 cents to 13 cents, mostly because of “reshaping of incurred R&D and SG&A cost assumptions throughout the year.”
What to expect in Tesla’s earnings report
Wall Street expects Tesla Motors Inc (NASDAQ:TSLA) to report earnings per share of 12 cents. The Stifel team is basing their estimates on 6,200 Model S deliveries and 25% gross margins for the automotive segment. That’s in line with guidance from the automaker’s management.
They are maintaining their long-term growth assumptions for units based on deliveries for the Model X starting in the first quarter of next year and the Generation III starting in the 2017 fiscal year. They suggest that if Tesla Motors Inc (NASDAQ:TSLA) expands more quickly in Europe and Asia, their new expectations could be too conservative. They also raised their estimates for research and development and selling, general, and administrative expense because they believe management has suggested that this year and next they will be investing in growth and the gigafactory.
Looking at Tesla in the long term
The Stifel team is increasing its earnings per share for the current fiscal year from $1.54 to $1.76 per share. That’s compared to Wall Street’s estimate of $1.76 per share. Their fiscal 2015 estimate moves from $2.59 to $3.83per share, compared to Wall Street’s $3.73 per share estimate. They raised their 2016 fiscal year estimate as well, from $3.21 to $5.08 per share.
The analysts believe Tesla Motors Inc (NASDAQ:TSLA) will continue to be profitable through the introduction of its Generation III vehicle and that reductions in battery cost are attainable. They also expect that global penetration of the automaker’s vehicles will be driven by high-income early adopters, masking the automaker’s infrastructure and retail investments, at least now.
What to watch for moving forward
The Stifel analysts say they’ll be keeping an eye on Tesla Motors Inc (NASDAQ:TSLA)’s Model S unit delivery numbers. They’ll also be looking at gross management and expect to see some revenue from emissions credits even though management expects not to sell any of those credits in the current fiscal year.
They’re estimating an average transaction price of $108,000 for the first quarter, which is slightly higher than the previous quarter’s $106,000. They say the main driver of this is reports of better than expected global sales, which could mean that Tesla Motors Inc (NASDAQ:TSLA) will sell more higher-end performance Model S sedans with the larger 85 kWh batteries.
In addition, they’re looking for more information on cash flow and management’s long-term capital plan.