Tesla Leads Pack Of Momentum Name Earnings

May. 7.14 | About: Tesla Motors (TSLA)

Summary

Tesla's Q1 report is almost here.

Expectations call for improvement throughout 2014.

Watch for updates on the gigafactory and convertible debt.

Green Mountain, SodaStream, and Dendreon will also report in the next week.

While the majority of earnings season is over, there still are some interesting names left to report. Specifically, some of the most debated "momentum names" will report in the next week or so. On Wednesday afternoon, electric car maker Tesla Motors (NASDAQ:TSLA) will report its Q1 results. Today, I'll preview Tesla's results and briefly look at some other interesting reports that are upcoming.

Tesla's Q1 report:

Tesla's market cap is nearly double that of the next largest name I'll discuss today, so my main focus will be on Tesla. Current analyst estimates call for non-GAAP revenues of $699.10 million, or about 24.4% growth from last year's Q1, which saw $561.79 million. For the bottom line, analysts are looking for a non-GAAP profit of $0.10 per share, which would actually be two cents below last year's Q1 profit of $0.12. In the four quarterly reports announced during 2013, Tesla beat on the top and bottom lines each time. If the pattern of beats continues, I would think Tesla comes in around $710-$720 million in revenues and perhaps $0.15-$0.20 in EPS.

In Tesla's Q4 investor letter, the company guided to vehicle production of about 7,400 vehicles for the quarter. However, due to the need to fill the pipeline for European and Asia markets, the company only expects to deliver about 6,400 models. In the Q1 period last year, Tesla delivered 4,900 vehicles. Tesla expects deliveries to increase throughout the year, with total delivery guidance of over 35,000 model S vehicles for 2014. That would be an increase of more than 55% from 2013.

Other than the Q1 results, guidance is probably the most important item. Like I said, the company is looking for delivery increases through the year, as well as gross margin improvements as 2014 progresses. Analysts are looking for roughly $819 million in Q2 revenues, and another $2.1 billion in the back half of the year. After a dime profit in Q1, analysts are looking for $0.27 in Q2, and about $1.40 in the back half of 2014. Revenues and margins will need to increase at a brisk pace, especially as dilution increases the share count throughout the year.

Speaking of dilution, an important item I'll be looking for is an update on the convertible debt situation. Tesla issued convertible notes in May 2013, and they are convertible if share prices are above a certain point. Those notes were eligible for conversion during Q1, so it will be interesting to see if any holders did convert during the quarter. Tesla has continued to raise funds, and dilution will be a key issue going forward. The company will need a couple of billion dollars to fund its gigafactory. We don't know the true cost just yet, and we also don't know how many partners Tesla may have and who they will be.

In the end, Tesla has a lot to prove. While the stock is well off its $265 yearly high, shares closed under $60 on May 6th last year. This is a stock trading for about 116 times expected 2014 EPS, and about 7 times 2014 sales. Tesla is a highly-shorted stock, although the number of shares short has come down recently. Tesla will need a strong report and solid guidance for shares to remain over $200. Should shares fall after the report, the next two levels of support would be the 100-day moving average around $195 and the 200-day moving average around $175.

Three other quick previews:

Also Wednesday afternoon, we'll hear from Keurig Green Mountain (NASDAQ:GMCR). The single serve coffee name soared last quarter after a deal with Coca-Cola (NYSE:KO). That deal proved that Green Mountain was having a problem with growth, and the company gave light guidance. We'll find out soon whether the company sandbagged because it had the big deal lined up. For fiscal Q2, analysts are currently looking for 4.3% revenue growth to $1.05 billion, and non-GAAP EPS to rise 2 cents to $0.95 per share. Green Mountain usually beats on the bottom line (quite handily most times), but the revenue number has had trouble beating expectations in the past. The company will show a bit of dilution in the near-term due to the deal, but the extra cash is helping to fund a buyback that will reduce the share count over time. After rising from $80 to $124 on the Coca-Cola deal, shares have retreated to $95. Management needs to show that the growth story of this company is still moving along.

Next Wednesday, we'll hear from a company that Green Mountain will look to compete with in the near future, and that is SodaStream (NASDAQ:SODA). The company that allows you to make your own soda at home has also been rumored to be looking at a deal, with PepsiCo (NYSE:PEP), Dr Pepper Snapple (NYSE:DPS), and Starbucks (NASDAQ:SBUX) being the names most in the spotlight. The bear camp has stated SodaStream is a fad, and the company is having some growth troubles currently. Q1 revenues are expected to basically be flat, with an expectation for a penny profit after a $0.57 profit in Q1 last year. SodaStream shares have rallied in recent months on the hope of a Green Mountain like deal, but the company needs growth as well.

One last name I want to briefly touch on is biotech Dendreon (NASDAQ:DNDN). Dendreon has struggled a bit in recent years, as the company has continued to disappoint investors and burn through cash. The company has a number of key questions that must be answered, especially in terms of its balance sheet and debt situation. The company will launch its prostate cancer treatment Provenge in Europe later this year, but a massive amount of debt is due at the start of 2016. Right now, some believe bankruptcy is an option, and it seems that a lot of dilution may be coming. In terms of analyst estimates, Q1 revenues are expected to rise by 2.4% to $69.19 million, and a loss of $0.28 per share is forecast. This is one report where the headline numbers are not the most important. Instead, investors will be interested in what management has to say about a number of key items. Dendreon will report this Thursday morning.

Final thoughts:

A couple of momentum names and highly-debated stocks are about to report. Tesla Motors is the biggest of these names, with a market cap that topped $30 billion earlier this year. Tesla's Q1 is expected to be the weakest quarter of 2014, with results and deliveries improving as the year progresses. I'll be looking for any updates on the convertible debt situation as well as the gigafactory. Additionally, over the next week, we'll get important reports from Keurig Green Mountain, Dendreon, and SodaStream. Just when earnings season was beginning to calm down, some exciting names will get their chance to steal the headlines.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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