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Honda (HMC) Q1 Earnings: Is a Disappointment in Store?
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Honda Motor Co., Ltd. (HMC - Free Report) is set to report first-quarter (ended Jun 30, 2016) fiscal 2017 results on Aug 2. In the last quarter, the company had posted a negative earnings surprise of 193.88%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Honda is concentrating on infrastructural development in North and South America to drive sales. The automaker is also focused on introducing new products and expanding its business in Asia to attract more customers. The company launched the BR-V crossover exclusively for the Asian markets in Jan 2016. It started selling the Honda Odyssey and Odyssey Absolute premium minivans in Japan from Feb 2016, and delivered the first 2017 Acura NSX supercar in May 2016. Further, Honda started selling the Clarity Fuel Cell sedan in Japan from Mar 2016. In Jun 2016, it started selling the 2017 Acura MDX, 2017 Accord Hybrid and 2017 Honda Ridgeline in the U.S. These product launches help boost sales volume. The company recorded a 5.2% year-over-year increase in U.S. sales to 792,355 vehicles in the first half of 2016.
However, Honda is witnessing declining sales volume in its domestic market, Japan. Moreover, higher selling, general and administrative, and research and development expenses are affecting the company’s operating income. Further, Honda is being affected by frequent recalls to fix faulty Takata airbags. The Japanese automaker is the largest customer of the faulty Takata airbags that can explode and shoot out metal fragments in a crashed vehicle.
Earnings Whispers
Our proven model does not conclusively show that Honda is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Honda’s Earnings ESP is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 71 cents.
Zacks Rank: Honda carries a Zacks Rank #5 (Strong Sell). 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.
Here are some 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 (Hold). The company’s second-quarter 2016 financial results are expected to release on Aug 3.
Magna International Inc. (MGA - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 5.
Cooper Tire & Rubber Co. has an Earnings ESP of +3.60% and a Zacks Rank #3. The company’s second-quarter 2016 results are expected to release on Aug 4.
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Honda (HMC) Q1 Earnings: Is a Disappointment in Store?
Honda Motor Co., Ltd. (HMC - Free Report) is set to report first-quarter (ended Jun 30, 2016) fiscal 2017 results on Aug 2. In the last quarter, the company had posted a negative earnings surprise of 193.88%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Honda is concentrating on infrastructural development in North and South America to drive sales. The automaker is also focused on introducing new products and expanding its business in Asia to attract more customers. The company launched the BR-V crossover exclusively for the Asian markets in Jan 2016. It started selling the Honda Odyssey and Odyssey Absolute premium minivans in Japan from Feb 2016, and delivered the first 2017 Acura NSX supercar in May 2016. Further, Honda started selling the Clarity Fuel Cell sedan in Japan from Mar 2016. In Jun 2016, it started selling the 2017 Acura MDX, 2017 Accord Hybrid and 2017 Honda Ridgeline in the U.S. These product launches help boost sales volume. The company recorded a 5.2% year-over-year increase in U.S. sales to 792,355 vehicles in the first half of 2016.
However, Honda is witnessing declining sales volume in its domestic market, Japan. Moreover, higher selling, general and administrative, and research and development expenses are affecting the company’s operating income. Further, Honda is being affected by frequent recalls to fix faulty Takata airbags. The Japanese automaker is the largest customer of the faulty Takata airbags that can explode and shoot out metal fragments in a crashed vehicle.
Earnings Whispers
Our proven model does not conclusively show that Honda is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Honda’s Earnings ESP is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 71 cents.
Zacks Rank: Honda carries a Zacks Rank #5 (Strong Sell). 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.
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Stocks to Consider
Here are some 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 (Hold). The company’s second-quarter 2016 financial results are expected to release on Aug 3.
Magna International Inc. (MGA - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 5.
Cooper Tire & Rubber Co. has an Earnings ESP of +3.60% and a Zacks Rank #3. The company’s second-quarter 2016 results are expected to release on Aug 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>