Chicago, IL – January 24, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include, Tesla TSLA, General Motors GM, Ford F and Stellantis STLA.
Here are highlights from Friday’s Analyst Blog:
Is Tesla a Buy Ahead of Q4 Earnings? A Look at Key Predictions
Teslais slated to release fourth-quarter 2024 results on Jan. 29, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 76 cents per share and $27.6 billion, respectively.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The earnings estimate for the to-be-reported quarter has been revised downward by 1 cent over the past 30 days. The bottom-line projection, however, indicates year-over-year growth of 7%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 9.7%.
For 2025, the Zacks Consensus Estimate for TSLA’s revenues is pegged at $117.2 billion, implying a rise of 17.5% year over year. The consensus mark for 2025 EPS is pegged at $3.30, implying a contraction of around 34.3% on a year-over-year basis.
In the trailing four quarters, this electric vehicle (EV) behemoth missed EPS estimates thrice and beat once, with the average earnings surprise being 0.13%.
Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote
Q4 Earnings Whispers for Tesla
Our proven model does not conclusively predict an earnings beat for Tesla. The combination of a positiveEarnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
TSLA has an Earnings ESP of -2.65% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping TSLA’s Q4 Results
In the fourth quarter, Tesla produced 459,445 (436,718 Model 3/Y and 22,727 other models) vehicles. It delivered 495,570 vehicles (471,930 Model 3/Y and 23,640 other models) globally. While the deliveries were up over 2% year over year and also touched a new quarterly high, they failed to hit even the psychological milestone of 500,000 units. The Zacks Consensus Estimate for deliveries was 517,043 units.
Tesla's automotive revenues for the to-be-reported quarter are projected to be $22.5 billion, representing a 4.5% increase year over year. The company offered substantial year-end incentives and discounts, especially on Models Y and S, to boost sales. However, these actions may have put pressure on margins. The Zacks Consensus Estimate for Tesla’s gross margin in its automotive segment is 18.9%, indicating a decline from 20.1% in the September-end quarter.
While automotive margins are expected to have been squeezed, Tesla's energy generation and storage business has been gaining traction. In the fourth quarter of 2024, the company deployed 11.0 GWh of energy storage products, up a whopping 243% year over year. With strong demand for its Megapack and Powerwall products, revenues from this segment are estimated at $2.6 billion, implying an 80% increase year over year and gross profit is expected to more than double.
Tesla's Services/Other unit is forecast to generate $2.9 billion in revenues (up from $2.16 billion recorded in the year-ago period), driven primarily by its expanding supercharging network. Major automakers like General Motors, Ford and Stellantis are adopting Tesla's NACS charging standard, boosting the segment’s outlook.
Tesla Price Performance & Valuation
Over the past year, shares of Tesla have doubled, outperforming the industry, sector and S&P 500’s growth.
From a valuation perspective, Tesla looks overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 11.25, higher compared to the industry’s 2.43 as well as its own 5-year average.
How Should You Play TSLA Ahead of Q4 Earnings?
With President Donald Trump returning to the White House, the EV landscape in the United States will see a major shift. Known for his anti-EV stance, Trump has already repealed Biden’s 2021 executive order that set a target of EVs making up 50% of new car sales by 2030. A rollback of the $7,500 EV tax credit is also likely.
However, Tesla CEO Elon Musk has downplayed the potential impact, noting that while such changes might slightly affect Tesla, they would be devastating for competitors. Tesla’s dominant scale and brand recognition may allow it to thrive even in a subsidy-free environment. Musk had projected 20-30% delivery growth for 2025 on the last earnings call.
Additionally, Trump's plans to raise tariffs on Chinese imports could hinder affordable EV manufacturers like BYD Co and NIO from gaining ground in the United States, reinforcing Tesla’s competitive edge. Further, with Musk leading the newly formed Department of Government Efficiency, regulatory simplifications for autonomous vehicle deployment could act as a tailwind for Tesla’s plans to expand Full Self-Driving capabilities and launch a robotaxi fleet.
Tesla’s ambitions are big, but isn’t it too early to bet on those promises? Its valuation also remains lofty at current levels, raising questions about its near-term upside potential. This earnings season, investors will closely monitor Tesla’s profit margins and cash flow to assess its overall financial health. Updates on 2025 delivery targets and progress in the AV space will also be key points of interest.
The year 2025 will be a pivotal “prove-it” moment, where the company must showcase its ability to drive sales growth, expand profitability and deliver on its ambitious goals, especially on the AV/robotaxi front. For now, it may be prudent for investors to await Elon Musk’s commentary on the fourth-quarter earnings call before making any decisions.
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
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