Electric carmaker Tesla Motors TSLA is scheduled to report second-quarter 2020 results on Jul 22 after market close. Let’s take a closer look at its fundamentals ahead of earnings release.

Tesla has been on a stupendous rally over the past three months, having soared nearly 124.4% and outperforming the industry’s growth of 40.6%. It overtook Japanese automaker Toyota Motor TM to become the most-valuable automaker in the world earlier this month. The outperformance came on the heels of euphoria about electric vehicles, higher demand for Model 3 and upbeat deliveries data. Additionally, the expectation of Tesla’s addition to the S&P 500 index led to the strength lately, pushing the share price to near $1,800 (read: Tesla Tops $1,000: ETFs to Ride High).

The solid trend is likely to continue as the luxury carmaker has reasonable chances of beating estimates this quarter and has seen positive earnings revisions ahead of its Q2 report.

Earnings Whispers

Tesla has a Zacks Rank #3 (Hold) and an Earnings ESP of +135.17%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the to-be-reported quarter has been revised upward from a loss of $1.03 to a loss of 64 cents over the past 30 days. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The earnings track is robust for the company, which delivered a four-quarter average earnings surprise of 482.1%. Additionally, the Zacks Consensus Estimate for the second quarter indicates substantial earnings growth of 42.9% from the year-ago quarter (see: all the Alternative Energy ETFs here).
 

Further, Wall Street analysts have become optimistic on Tesla with many of them raising the target price on the stock in recent weeks. Tesla belongs to a bottom-ranked Zacks industry (in the bottom 34%).

The Zacks Consensus Estimate for average target price is $748.35 with nearly 23% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.

Strong Q2 Production

Earlier this month, Tesla reported stronger-than-expected Q2 deliveries. The company produced 82,272 (75,946 Model 3 and Y, and 6,326 Model S and X) vehicles and delivered 90,650 (80,050 Model 3 and Y, and 10,600 Model S and X) vehicles. Though the delivery number is 4.8% down from the year-ago quarter, it is higher than 88,400 deliveries recorded in the first quarter (read: 5 ETFs to Drive High on Tesla’s Solid Q2 Deliveries).

The increase came despite the coronavirus restrictions, which forced it to shut down its Fremont, CA, factory for most of the quarter. Now, the factory has successfully ramped production back to its prior levels.

ETFs to Watch

Given this, ETFs having the highest allocation to this luxury carmaker will be in focus going into its earnings announcement. These funds would be the potential movers if Tesla surprises the market.

SoFi 50 ETF SFYF

This ETF follows the SoFi Social 50 Index and is composed of the top 50 most widely held U.S. listed stocks on SoFi Invest. Tesla takes the top spot with 13.5% allocation. The product has amassed $3.1 million in its asset base and charges 29 bps in annual fees.

ARK Autonomous Technology & Robotics ETF ARKQ

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 38 stocks with TSLA occupying the top spot with 11.3% share. The product has accumulated $407 million in its asset base and charges 75 bps in fees per year.

ARK Next Generation Internet ETF ARKW

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 47 stocks in its basket with Tesla occupying the top position at 10.7%. The ETF has amassed $1.8 billion in its asset base and charges 76 bps in annual fees.

MicroSectors FANG+ ETN FNGS

This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket with Tesla accounting for 10% share. The product has accumulated $48.6 million in its asset base and charges 58 bps in annual.

First Trust NASDAQ Global Auto ETF CARZ

This fund offers a pure-play global exposure to 34 auto stocks by tracking the NASDAQ OMX Global Auto Index. Tesla is the top firm accounting for 9.3% share. CARZ has a lower level of $19.1 million in AUM and charges 70 bps in fees per year. The product has a Zacks ETF Rank #5 (Strong Sell) with High risk outlook (read: Auto Sales Plunge in Q2: ETFs & Stocks in Focus).

First Trust Nasdaq Transportation ETF FTXR

This fund offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. Tesla occupies the top position in the basket with 9.3% share. FTXR has amassed $6.3 million in its asset base and charges 60 bps in annual fees. It has a Zacks ETF Rank #4 (Sell) (read: “Build Back Better” Plan of Biden to Boost These ETFs).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report