Rivian (RIVN) Q3 2024 earnings release: November 7, 2024
Key estimates:
EPS forecast: -$0.89 (25.2% improvement YoY)
Revenue forecast: $970.69M (-27.4% YoY)
Recent developments:
EPS estimates revised up 1.16% in past 30 days
Using Zacks Earnings ESP model for prediction
70% accuracy rate for positive ESP with Zacks Rank #1-3
Opinion
The market anticipates improved operational efficiency given the projected narrowing of losses despite significant revenue decline. However, the substantial revenue drop raises concerns about demand and production scalability. The modest upward revision in EPS estimates, while positive, may not fully offset concerns about the steep revenue decline. The limitation of the Zacks ESP model's predictive power to positive readings suggests heightened uncertainty in forecasting performance.
Core Sell Point
Rivian's expected improvement in EPS despite sharp revenue decline indicates potential progress in cost management but raises questions about the company's growth trajectory and market demand.
Wall Street expects a year-over-year increase in earnings on lower revenues when Rivian Automotive (RIVN) reports results for the quarter ended September 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The earnings report, which is expected to be released on November 7, 2024, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. Zacks Consensus Estimate This a manufacturer of motor vehicles and passenger cars is expected to post quarterly loss of $0.89 per share in its upcoming report, which represents a year-over-year change of +25.2%. Revenues are expected to be $970.69 million, down 27.4% from the year-ago quarter. Estimate Revisions Trend The consensus EPS estimate for the quarter has been revised 1.16% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Earnings Whisper Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
