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Rising Deliveries to Offset NIO's Cost Woes This Earnings Season

Zacks Equity Research
·4-min read

NIO Inc. NIO is slated to release fourth-quarter 2020 results on Mar 1, after the closing bell. This China-based electric vehicle (EV) maker’s quarterly results are likely to reflect the favorable impact of rising demand for the ES6 model, the company’s 5-seater high-performance premium smart electric SUV, which forms a major chunk of the automaker’s overall deliveries.

(Also read: NIO to Report Q4 Earnings: What's in Store for the Stock?)

Third-Quarter Highlights

In the last reported quarter, NIO incurred a loss of 12 cents per share on revenues of $666.6 million. Cash and cash equivalents totaled $2.8 billion as of Sep 30, 2020.

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The company delivered 12,206 vehicles in third-quarter 2020 including 8,660 ES6s, 3,530 ES8s and 16 EC6s. Vehicle deliveries skyrocketed 154.3% year over year. Stabilization of the coronavirus pandemic in China led to high vehicle sales in the third quarter. Revenues generated from vehicle sales amounted to $628.4 million, representing an uptick of 146.1% from the corresponding quarter of 2019.

NIO’s Record Q4 Delivery Count Sparks Optimism

NIO’s strong vehicle delivery count is likely to have driven sales during the to-be-reported quarter. This Shanghai-based EV maker delivered 17,353 vehicles in the December quarter, exceeding the upper-end of the guided range and skyrocketing 111% year over year. Total fourth-quarter 2020 deliveries comprised 7,574 ES6s, 4,873 ES8s and 4,906 EC6s.

Soaring demand for ES6, ES8 and EC6 models is expected to have buoyed the company’s fourth-quarter revenues. Markedly, NIO — dubbed as the Tesla TSLA of China — delivered 7,007 vehicles in December alone, setting a new monthly record. The reported figure reflected a whopping rise of 121% year over year, comprising 2,493 ES6s, 2,009 ES8s — the company’s 6-seater and 7 seater electric-SUV, respectively — and 2,505 EC6s, 5-seater premium electric coupe SUV.

While surging deliveries are likely to have aided NIO’s top line, escalating research and development (R&D), as well as selling, general and administration costs might have hurt operating profits in the December quarter. In fact, the company’s operational inefficiency has been under pressure over the last several quarters, a trend that most likely continued in the quarter to be reported as well.

Earnings & Revenue Projections for Q4

The Zacks Consensus Estimate for the to-be-reported quarter’s loss is pegged at 14 cents a share. A loss of 39 cents per share was incurred in the prior-year quarter. The Zacks Consensus Estimate for revenues of $742 million indicates 81.4% growth from the year-ago reported figure.
 
Nonetheless, our proven model does not conclusively predict an earnings beat for NIO this time around, which carries a Zacks Rank #3 (Hold) and an ESP of 0.00%, at present. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increase the odds of an earnings beat. But that is not the case here as shown above. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors should note that NIO’s peer XPeng Inc. XPEV is slated to report quarterly numbers on Mar 8. Meanwhile, another China EV maker Li Auto LI unveiled fourth-quarter results yesterday. The company posted earnings of 2 cents a share and revenues of 635.5 million.

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Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
NIO Inc. (NIO) : Free Stock Analysis Report
 
XPeng Inc. Sponsored ADR (XPEV) : Free Stock Analysis Report
 
Li Auto Inc. Sponsored ADR (LI) : Free Stock Analysis Report
 
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Zacks Investment Research