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Toyota (TM) to Post Q1 Earnings: Will it Surprise Investors?

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Toyota Motor Corporation (TM - Free Report) is set to report first-quarter (ended Jun 30, 2016) fiscal 2017 results on Aug 4. In the last quarter, the company posted a positive earnings surprise of 15.94%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Toyota sold 4.99 million vehicles globally in the first half of 2016 that indicates a 0.6% decline from the first half of 2015. This will negatively affect revenues. Toyota already expects fiscal 2017 consolidated revenues, operating income and net earnings to decline. This leads to expectations of weak results in the quarter to be reported.

From Apr 2016, Toyota changed its corporate structure to increase the efficiency of its work processes, facilitate faster decision making and fortify functions that devise its objectives and strategies. This restructuring converted it into a product-based organization from a function-based one. Toyota is now operating with nine product- and region-based business divisions. It also created a Corporate Strategy Division for mid- to long-term strategic planning. These efforts should positively impact earnings.

Earnings Whispers

Our proven model does not conclusively show that Toyota 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 for Toyota is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $2.30.

Zacks Rank: Toyota carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

TOYOTA MOTOR CP Price and EPS Surprise

TOYOTA MOTOR CP Price and EPS Surprise | TOYOTA MOTOR CP Quote

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.

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. 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 +7.48% and a Zacks Rank #3. The company’s second-quarter 2016 results are expected to release on Aug 4.

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