Back to top

Image: Bigstock

Cooper Tire (CTB) to Report Q3 Earnings: What to Expect?

Read MoreHide Full Article

Cooper Tire & Rubber Co. is set to report third-quarter 2016 results on Oct 31. In the last quarter, this tire manufacturer posted a positive earnings surprise of 18.69%. Let us see how things are shaping up for this announcement.

Factors Influencing this Quarter

Cooper Tire’s focus on improving its business operations has helped improve earnings. The company is well positioned due to its good-quality brands, loyal customer base, efficient workforce, strong technical capabilities and network of manufacturing facilities. Cooper Tire continues to develop great products with superior design and functionality, which will satisfy the demand in all regions. The company expects its improving product mix to expand profitability.

Meanwhile, Cooper Tire has been focusing on expansion in Latin America. The company has been developing products specifically for the region and even opened a new sales office in São Paulo, Brazil this year. To increase its share in the Chinese market, it partnered with local tire dealers in China to open four Cooper Superfeel Centers, which are Cooper-branded tire sales and service superstores.

However, Cooper Tire expects raw material costs in the third quarter to increase marginally from the second quarter of 2016. This will increase its production costs and may adversely affect margins. The company also expects to record a non-cash pension settlement charge of $14–$18 million in the third quarter related to optional lump-sum payments of benefits offered to certain former employees. These will add to expenses.

Earnings Whispers

Our proven model does not conclusively show that Cooper Tire 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: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Earnings ESP for Cooper Tire is currently pegged at 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.01. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

COOPER TIRE Price and EPS Surprise

 

COOPER TIRE Price and EPS Surprise | COOPER TIRE Quote

Zacks Rank: Cooper Tire sports a Zacks Rank #1 (Strong Buy), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

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.

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:

Standard Motor Products Inc. (SMP - Free Report) , which is expected to report third-quarter 2016 results on Oct 27, has an Earnings ESP of +4.44% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Factory Holding Corp (FOXF - Free Report) has an Earnings ESP of +2.56% and a Zacks Rank #1. The company will report third-quarter 2016 financial numbers on Nov 2.

Magna International Inc. (MGA - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #2 (Buy). The company is expected to release third-quarter 2016 results on Nov 3.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>