Following a good start, Q3 earnings at the auto sector have taken a turn for the worse. Nearly 80% of the sector’s companies had posted results as of Oct 28, 2016. These companies recorded a year-over-year decline of 9.4% in earnings and 1.2% in revenues, per our Earnings Preview report. In comparison, total S&P 500 companies that had reported till then posted a 2.2% increase in earnings and a 1.3% rise in revenues.
The overall projections for the auto sector’s Q3 earnings remain weak. By the end of the earnings season, auto sector earnings and revenues are expected to be down 8.8% and 4.7%, respectively. This will place it among the worst performers in the 16 Zacks sectors. In comparison, total S&P 500 earnings are projected to improve 2.0%, with revenues also rising 1.4% year over year.
The decline in U.S. auto sales in August and September has been hurting many automakers. The pressure to maintain attractive incentives and deals may also strain their margins. Further, expenses related to safety recalls as well as the adverse impact of foreign currency translation remain headwinds for the sector. However, there are a few positives as well. Strong sales growth in China and Europe is the primary driving factor for the auto sector in Q3. Moreover, low fuel prices are driving the sales of higher margin vehicle segments, such as SUVs and light trucks.
With all these factors in mind, let’s see what awaits these three auto stocks that are slated to release third-quarter 2016 results on Nov 2.
Delphi Automotive PLC has an Earnings ESP of +1.41% because the Most Accurate estimate stands at $1.44, while the Zacks Consensus Estimate is pegged at $1.42.Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
The company currently holds a Zacks Rank #4 (Sell). (Read more: Will Delphi Automotive's Earnings Disappoint in Q3?)
Horizon Global Corporation currently has an Earnings ESP of -14.29% because the Most Accurate estimate stands at 24 cents, while the Zacks Consensus Estimate is pegged at 28 cents. We note that Horizon Global delivered positive earnings surprises in two of the trailing four quarters and negative surprises in the other two. This resulted in an average positive surprise of 11.94%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Tower International, Inc. has an Earnings ESP of +1.25% as the Most Accurate estimate of 81 cents is above the Zacks Consensus Estimate of 80 cents. The company posted positive earnings surprises in each of the trailing four quarters, with an average positive surprise of 10.69%. Tower International currently carries a Zacks Rank #3 (Hold).
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Auto Stocks' Q3 Earnings to Watch on Nov 2: DLPH, HZN, TOWR
Following a good start, Q3 earnings at the auto sector have taken a turn for the worse. Nearly 80% of the sector’s companies had posted results as of Oct 28, 2016. These companies recorded a year-over-year decline of 9.4% in earnings and 1.2% in revenues, per our Earnings Preview report. In comparison, total S&P 500 companies that had reported till then posted a 2.2% increase in earnings and a 1.3% rise in revenues.
The overall projections for the auto sector’s Q3 earnings remain weak. By the end of the earnings season, auto sector earnings and revenues are expected to be down 8.8% and 4.7%, respectively. This will place it among the worst performers in the 16 Zacks sectors. In comparison, total S&P 500 earnings are projected to improve 2.0%, with revenues also rising 1.4% year over year.
The decline in U.S. auto sales in August and September has been hurting many automakers. The pressure to maintain attractive incentives and deals may also strain their margins. Further, expenses related to safety recalls as well as the adverse impact of foreign currency translation remain headwinds for the sector. However, there are a few positives as well. Strong sales growth in China and Europe is the primary driving factor for the auto sector in Q3. Moreover, low fuel prices are driving the sales of higher margin vehicle segments, such as SUVs and light trucks.
With all these factors in mind, let’s see what awaits these three auto stocks that are slated to release third-quarter 2016 results on Nov 2.
Delphi Automotive PLC has an Earnings ESP of +1.41% because the Most Accurate estimate stands at $1.44, while the Zacks Consensus Estimate is pegged at $1.42.Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
The company currently holds a Zacks Rank #4 (Sell). (Read more: Will Delphi Automotive's Earnings Disappoint in Q3?)
DELPHI AUTO PLC Price and EPS Surprise
DELPHI AUTO PLC Price and EPS Surprise | DELPHI AUTO PLC Quote
Horizon Global Corporation currently has an Earnings ESP of -14.29% because the Most Accurate estimate stands at 24 cents, while the Zacks Consensus Estimate is pegged at 28 cents. We note that Horizon Global delivered positive earnings surprises in two of the trailing four quarters and negative surprises in the other two. This resulted in an average positive surprise of 11.94%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HORIZON GLBL CP Price and EPS Surprise
HORIZON GLBL CP Price and EPS Surprise | HORIZON GLBL CP Quote
Tower International, Inc. has an Earnings ESP of +1.25% as the Most Accurate estimate of 81 cents is above the Zacks Consensus Estimate of 80 cents. The company posted positive earnings surprises in each of the trailing four quarters, with an average positive surprise of 10.69%. Tower International currently carries a Zacks Rank #3 (Hold).
TOWER INTL INC Price and EPS Surprise
TOWER INTL INC Price and EPS Surprise | TOWER INTL INC Quote
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>