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General Motors (GM) Q2 Earnings May Beat: Stock to Gain?

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General Motors Company (GM - Free Report) is set to report second-quarter 2016 results on Jul 21. Last quarter, the company delivered a positive earnings surprise of 24.75%. Let us see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that General Motors is likely to beat earnings this quarter because it has the right combination of the two key components.

Zacks ESP: Earnings ESP for General Motors is currently pegged at +4.08% as the Most Accurate estimate of $1.53 stands above the Zacks Consensus Estimate of $1.47. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: General Motors currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

The combination of General Motors’ Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-than-Expected Earnings?

General Motors’ retail sales in the U.S. went up 1.3% year over year to 1,137,101 units during the first half of 2016. Further, the company and its joint ventures in China reported a 5.3% increase in sales to 1,810,476 vehicles during the period. Higher sales should lead to better revenues for the company. In addition, the automaker is focused on investment in innovative technologies and vehicles, which should provide sustained growth.

GENERAL MOTORS Price and EPS Surprise

GENERAL MOTORS Price and EPS Surprise | GENERAL MOTORS Quote

Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Westport Fuel Systems Inc. (WPRT - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 3.

Allison Transmission Holdings, Inc. (ALSN - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Jul 27.

Johnson Controls Inc. (JCI - Free Report) has an Earnings ESP of +0.97% and a Zacks Rank #3. The company’s third-quarter fiscal 2016 financial results are expected to release on Jul 21.

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