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Key points to remember
- Analysts estimate adjusted EPS at $ 1.15 from $ 0.41 in Q4 2019.
- Vehicle deliveries show strong year-over-year growth.
- Vehicle sales continue to increase despite the weak economy due to the COVID-19 pandemic.
Tesla Inc. (TSLA), the electric car maker, has just had a breakthrough year in which it recorded for the first time a fifth consecutive quarter of profitability, joined the S&P 500 and became the most successful automaker. precious of the world as its share price skyrocketed. . It also made CEO Elon Musk the richest man on the planet.But despite this success, Tesla’s global market share remains minimal, its sales are minimal compared to the biggest automakers, and skeptics say Tesla’s stock is significantly overvalued. Its price / earnings ratio is high at 1,616 times earnings.
Given this high valuation, investors will be looking for strong financial results when Tesla releases its results on January 27, 2021 for the fourth quarter of fiscal 2020.Analysts expect a significant increase in adjusted earnings per share (EPS) due to strong revenue growth compared to the last year’s quarter.
Tesla’s vehicle deliveries, whose fourth quarter results were released earlier this month, are another key metric that is of interest to investors. The number of vehicles delivered by the electric manufacturer in the fourth quarter increased significantly compared to the same quarter a year ago.
Tesla shares skyrocketed in 2020. The stock’s superior performance over the past year was briefly interrupted by the pandemic-induced stock market crash between late February and late March 2020 and a significant pullback between late February. August and early September. But that didn’t stop Tesla shares from posting a total return of 672.1% over the past 12 months, well above the S&P 500 total return of 16.0%.
Source: TradingView.
A driving force behind the action was Tesla’s success in posting more consistent profits after years of erratic performance. Adjusted EPS increased 105.2% in the third quarter of fiscal 2020, marking the fifth consecutive quarter of profitability. Revenue increased 39.2%, its largest increase since the second quarter of fiscal 2019.Tesla noted that revenue growth was primarily driven by substantial increases in vehicle deliveries as well as growth in other parts of its business.
Results for the second quarter of fiscal 2020 were mixed. Revenue fell 4.9%, just the second quarter of revenue decline in at least 15 quarters. However, Tesla posted positive adjusted EPS compared to an adjusted loss per share in the prior year quarter.To be sure, Tesla’s positive Q2 earnings were not fueled by strong operating results. Instead, they’ve been spurred on by selling regulatory zero-emission credits to other automakers, who need the credits to avoid penalties.Analysts expected Tesla to post a loss in the second quarter of fiscal 2020.
The second quarter also marked the fourth straight quarter of positive GAAP earnings for Tesla, which qualified the company’s stock for inclusion in the S&P 500.Initially ignored for inclusion in September, Tesla was finally added to the General Market Index in December.
Analysts expect Tesla’s profitability to continue in the fourth quarter of fiscal 2020. Adjusted EPS is expected to increase 178.8% and revenue is expected to increase 44.5% from the same period of three months a year ago. For fiscal 2020, analysts expect Adjusted EPS to increase 6,330.8% as annual revenue increases 28.3%.
| Tesla key metrics | |||
|---|---|---|---|
| Q4 2020 (fiscal year) | Q4 2019 (fiscal year) | Q4 2018 (fiscal year) | |
| Adjusted earnings per share ($) | 1.15 (estimate) | 0.41 | 0.39 |
| Revenue (in billions of dollars) | 10.7 (estimate) | 7.4 | 7.2 |
| Vehicle deliveries (K) | 180.6 (actual) | 110.7 | 89.5 |
Source: Visible Alpha; You’re here.
As mentioned above, investors are also interested in Tesla vehicle deliveries. Tesla’s main business is the manufacture of electric cars and must continue to expand its production in order to increase revenue and profits. The electric car maker has made a number of key acquisitions over the past few years, including German company Grohmann Engineering GmbH and Perbix Machine Co. Inc., to increase efficiency and manufacturing capacity. The increase in efficiency and production capacity is important to justify Tesla’s high valuation. And while it may currently dominate the electric vehicle market, other automakers are moving aggressively to challenge Tesla’s dominance.
Tesla has so far been able to continuously increase vehicle deliveries, excluding the second quarter of fiscal 2020, when deliveries fell 4.3% amid the pandemic.Vehicle deliveries for the fourth quarter of fiscal 2020, which have already been reported, increased 63.1% year-over-year (year-on-year) after rising 44.1% year-on-year year in the third quarter of fiscal 2020. The fourth quarter increase marked the fastest pace of growth since the second quarter of fiscal 2019. For fiscal 2020, Tesla delivered a total of 499,550 vehicles for an annual rate of 35.9%.While this rate of growth is impressive for most companies, it can be a warning sign for Tesla and its investors. The 2020 growth rate was the slowest for annual vehicle deliveries since fiscal 2017 and the second slowest growth in six years.
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