Tesla (TSLA) Stock Revs Up on Anticipation of Quarterly Sales

Tesla Motors (TSLA) stock is rallying on expectations that the Palo Alto-based electric car maker will report a year-over-year growth in sales for the third quarter of 2015.
By U-Jin Lee ,

NEW YORK (TheStreet) -- Tesla Motors (TSLA) - Get Report  stock is rallying 3.92% to $215.05 in Monday's afternoon trading session on expectations that the Palo Alto-based electric car maker on Tuesday after the market closes will report a year-over-year growth in sales for the third quarter of 2015. 

While analysts for the latest quarter are projecting revenue to be $1.26 billion, up from $932 million in the same period the year before, Tesla is expected to post a loss of 48 cents a share, compared to a profit of 2 cents a share a year ago.

Investors will be paying attention to how many vehicles the company delivered in the latest quarter. 

While sales are estimated to show a growth, former Vice Chairman of General Motors (GM) Bob Lutz added that Tesla looks like it's losing momentum. 

Several reasons for his bearish outlook include bleeding cash, securitized assets and mounting inventory, Fortune reports. 

Separately, TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 24.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • TESLA MOTORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TESLA MOTORS INC reported poor results of -$2.36 versus -$0.71 in the prior year. This year, the market expects an improvement in earnings (-$0.79 versus -$2.36).
  • The share price of TESLA MOTORS INC has not done very well: it is down 11.12% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 31.91%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.29% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$159.52 million or 4356.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: TSLA
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