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Auto Stocks' Q2 Earnings Queued Up for Jul 24: HOG & PCAR

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The Auto sector is witnessing a slew of second-quarter 2018 earnings releases, and many big releases lined up this week. Two important auto companies, Genuine Parts Company (GPC - Free Report) and WABCO Holdings Inc. , have already reported with earnings and revenue beat.

Per the latest Earnings Preview, 48 companies under the S&P 500 category have reported results. These companies’ beat ratios were 89.6% and 83.3% for earnings and revenues, respectively.

For second-quarter 2018, earnings for auto companies are expected to decline 9.3% on a year-over-year basis and revenues are likely to increase 3.4%. However, the S&P 500 companies are likely to witness 20.4% and 8.3% year-over-year growth in earnings and revenues, respectively, in the quarter under review.

In 2018, industry sales have been witnessing an upside. A strong job market and favorable tax measures have boosted the consumer demand, which, in turn, is driving sales. So far this year, concerns about high interest rates and growing oil prices have not stopped Americans from splurging on sport utility vehicles (SUVs) and pickup trucks. In fact, this changing preference, from conventional passenger cars toward spacious vehicles, has prompted automakers to reorient their business strategies and invest hugely. In the changing situation, big discounts are playing a big role in helping automakers grab a higher share of the market or at least retain their share. However, these discounts are putting pressure on their margins.

In addition to this, automakers are changing gears due to the compulsion to move toward an all-electric vehicle (EVs) future alongside substantial investments toward niche autonomous driving technology. In between all these developments, recalls remain an overhang.

Now, let’s take a closer look at two big names in the auto industry — Harley-Davidson, Inc. HOG and PACCAR Inc. (PCAR - Free Report) — which are set to announce results on Jul 24.

We relied on the proven Zacks quantitative model, combining a favorable Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold), with a positive Earnings ESP, to predict the chances of earnings beat this quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that with the ideal combination of the two key ingredients — Zacks Rank and Earnings ESP — chances of a positive surprise are as high as 70% for the stocks lined up for an earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Milwaukee, WI-based Harley-Davidson manufactures and sells custom, cruiser and touring motorcycles. At present, the company is making investments to develop and launch electric motorcycles by 2019. Our proven model does not conclusively predict an earnings beat for Harley-Davidson. This is because it has an Earnings ESP of -1.48% and a Zacks Rank #4 (Sell).

In the last reported quarter, the company outpaced consensus estimates. Additionally, in the last four quarters, the company surpassed estimates in three while meeting in one. Further, it has a long-term earnings growth rate of 8%. (Read more: Harley-Davidson Q2 Earnings: Disappointment in Store?)

Headquartered in Bellevue, WA, PACCAR engages in designing, manufacturing and customer support of premium light, medium and heavy-duty trucks. Further, the company manufactures advanced diesel engines and distributes truck parts. In the last reported quarter, the company pulled off a positive surprise. Further, in all of the trailing four quarters, it exceeded estimates, with an average beat of 6.9%.

The company has a long-term growth rate of 10.8%. Per our model, currently, it can’t be conclusively said that PACCAR is poised to beat earnings this quarter as it has an Earnings ESP of 0.00% and a Zacks Rank of 3. (Read more: PACCAR to Report Q2 Earnings: Is a Beat in Store?)

PACCAR Inc. Price and EPS Surprise

PACCAR Inc. Price and EPS Surprise | PACCAR Inc. Quote

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Genuine Parts Company (GPC) - free report >>

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PACCAR Inc. (PCAR) - free report >>

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