The first-quarter earnings season is in full swing. A few automakers have already released their earnings while a majority of them will release theirs in the next few days. On Apr 24, PACCAR Inc. PCARand Harley-Davidson Inc. HOGreported first-quarter earnings. Both the companies reported earnings beat for the quarter.
Per the latest Earnings Preview, 87 companies from the S&P 500 category have already announced first-quarter results as of Apr 20, registering earnings and revenue beat ratios of 82.8% and 67.8%, respectively.
However, on a year-over-year basis, the auto sector’s bottom line in the to-be-reported quarter is expected to record a decline of 9.6% while the top line is likely to fall 3.4%. However, the S&P 500 companies are estimated to record respective 18.3% and 7.7% year-over-year rise in earnings and revenues during the quarter.
An improved economy and shift in consumer preferences toward trucks and sports utility vehicles (SUV) encouraged automakers to launch new models in the U.S. market with an aim to earn their share of profit. In Europe, automakers are witnessing a decline in vehicle sales. Per European Automobile Manufacturers’ Association, vehicle registrations edged down 0.6% in first-quarter 2018. This decline is majorly due to slowing economic growth and uncertain trading regulations, once U.K. pulls itself out of European Union.
Now, let’s evaluate how the four auto companies namely General Motors Company GM, BorgWarner Inc. BWA, LKQ Corporation LKQand Lear Corporation LEAare placed ahead of reporting quarterly figures on Apr 26.
We relied on the proven Zacks quantitative model, combining a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) with a positive Earnings ESP, to predict the chances of earnings beat this quarter. You can see the complete list of today’s Zacks #1 Rank stocks here .
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that with an ideal combination of the two key ingredients — Zacks Rank and ESP — chances of a positive surprise are as high as 70% for the stocks, which are lined up for an earnings release.
Detroit, MI-based General Motors offers a complete range of vehicles to cater to the needs of customers. Its products range from electric cars to heavy-duty full-size trucks. The company offers products under eight distinctive automotive brands namely, Chevrolet, Buick, GMC, Cadillac, Holden, Baojun, Wuling, and Jiefang. Our model does not predict that the company, with an Earnings ESP of -2.21% and a Zacks Rank #3, is likely to beat on earnings as the combination leaves surprise prediction inconclusive.
In the last reported quarter, the company surpassed the Zacks Consensus Estimate. It also beat estimates in the trailing four quarters with an average positive surprise of 18.4%. General Motors has long-term earnings growth rate of 8.4%. (Read more: General Motors to Report Q1 Earnings: What's in Store?)