A rosy weekend announcement that Tesla Motors Inc (ticker: TSLA) saw a dramatic increase in global deliveries in the third quarter should give TSLA stock a little extra jolt this week.
Tesla should now enter this trading week with a much-needed boost of positivity amid a year that has included the first death in one of the company’s cars, fears about growth and skepticism amid the company’s proposed merger with another Elon Musk brainchild, SolarCity Corp. ( SCTY).
Tesla announced on Sunday that global deliveries for the third quarter came to 24,500 — 15,800 Model S units, and 8,700 Model X units. The total figure marked a 70 percent-plus sequential improvement and was more than double its third-quarter deliveries from a year ago. TSLA also announced that about 5,500 vehicles were in transit and would count toward the fourth quarter’s delivery figure, and maintained its guidance of 50,000 deliveries for the second half of the year.
The figures come amid a difficult quarter in which consumers had to weigh news that Tesla’s Autopilot system was being investigated in connection with a fatal crash in Florida. They also appear to be the result of a plea from Musk, who Bloomberg said pressed employees to “cut costs and deliver ‘every car we possibly can’ in a push to show positive cash flow in the third quarter,” according to an internal email.
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Tesla has previously said it would try to raise funds — via a debt or equity offering — sometime this year so it can produce its lower-margin Model 3 and continue work on its Gigafactory, though it’s expected that those funds could help finance the SolarCity acquisition as well.
Sunday’s announcement could very much help TSLA with that effort.
Here are other stocks that should be in the news this week:
Yum Brands (YUM). The parent of KFC, Pizza Hut and Taco Bell will be reporting earnings Wednesday after the bell, and as usual, China will be front and center.
Just in an unusual way.
Yum’s quarterly numbers have long ebbed and flowed in large part due to its immense Chinese operations, which at times have provided breakneck growth, but also immense volatility that has occasionally acted as an anchor on YUM shares. That dynamic will soon change, as Yum Brands is finally spinning off its Chinese business, Yum China, which will trade as YUMC on the New York Stock Exchange starting Nov. 1. (Starting Oct. 17, the businesses will trade as YUM WI and YUMC WI.)
So now, investors will look for information on the new, China-free Yum Brands. Wells Fargo analyst Jeff Farmer writes in a recent report that the company’s third-quarter numbers will be “of secondary import relative to the company’s outlook post the China spin.”
For the record, YUM is expected to earn $1.09 per share on fractional revenue growth to $3.46 billion. Yum Brands also increased its dividend before this report, by 11 percent to 51 cents per share.
Micron Technology (MU). This semiconductor giant is going to have to show Wall Street something spectacular when it opens the books on its fiscal fourth quarter Tuesday evening, or it risks some profit-taking on its 90 percent gains since May.
And it might just do that.
Micron shares began rallying in earnest this May after Applied Materials ( AMAT) announced that it would be decreasing NAND spending and growing DRAM spending, which Sterne Agee and other analysts noted would provide a boost to MU’s business. Shares were further bolstered in July by the announcement of a shareholder rights plan that increased the “possibility of strategic investment or acquisition,” according to Credit Suisse.
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And lately, NAND flash chip prices have improved, as have DRAM volumes. MScience’s Mark Bachman said in August that “we believe the sell-side is broadly underestimating Micron’s sales in its August quarter (the fiscal fourth quarter).” Indeed, DRAM prices accelerated through the August quarter to seven-month highs in September, which could help improve Micron’s outlook.
Meanwhile, analysts have set a low bar for MU, projecting a 12.5 percent revenue decline to $3.15 billion and a 12-cent-per-share loss.
Micron’s breakout run might not be done yet.
Ruby Tuesday (RT). Restaurant chain Ruby Tuesday could be on its last legs.
Friday’s close at $2.50 per share is more than 90 percent less than peak pricing near $33 reached in 2004 and 2006. While the company did rebound for a couple of years after its Great Recession cratering, Ruby Tuesday’s stock and overall business has been in a strong decline since 2011. Revenues have been dipping consistently since 2012, and they company has been posting losses of various sizes over that time.
RT shares are off 55 percent alone this year, in part spurred by September’s early announcement of some fiscal first-quarter results. Sales of $256.7 million were shy of analyst expectations of $263 million — on a comparable-store sales decline of 2.7 percent — and a loss ranging between 10 and 12 cents differed from the mere penny deficit estimated by Wall Street.
James J. Buettgen, who had been CEO since December 2012, took the opportunity to announce his resignation.
Ruby Tuesday’s earnings report, scheduled to be released Thursday night, likely should provide more details about just how dire the situation is.
Darden Restaurants (DRI). The parent of Olive Garden and LongHorn Steakhouse looks far better than RT by comparison, even amid slight losses in an up-and-down 2016.
But this quarter could spark a march into the black — at least if analysts’ slight bursts of optimism are warranted.
Darden is expected to announce substantial profit growth Tuesday morning. Earnings are estimated at 82 cents, which would represent a 20 percent year-over-year improvement. Revenues are expected to tick 2 percent higher to $1.72 billion.
Wells Fargo, for instance, is projecting better earnings than the Street’s expecting, saying in a recent note that it’s projecting profits of 84 cents per share. Wells also sees comps coming in at 1.1 percent growth — not scintillating, but better than it sees for the broader industry.
Deutsche Bank also provided cautious optimism recently, saying, “We believe the company is well positioned at the unit-level (through a focus on its core operations, driving sales through value, core and newness and alternative forms of distribution like to-go/catering) and through its capital structure.”
[See: 8 Stocks to Profit From America’s Love of Burgers.]
DRI stock currently trades at a little more than 14 times 2017 earnings projections and yields 3.6 percent in dividends currently. An upside surprise could be just what Darden needs to convince hesitant stock-watchers to finally take dip a toe in.
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Positive Delivery Report May Help Drive Tesla Motors Inc Stock (TSLA) originally appeared on usnews.com
