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AB Volvo (VLVLY) to Post Q2 Earnings: What's in the Cards?

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AB Volvo (VLVLY - Free Report) is set to release second-quarter 2019 results on Jul 18, before the opening bell. The company surpassed earnings estimates in three of the trailing four quarters, at an average of 21.8%.

In the past six months, shares of AB Volvo have outperformed the industry it belongs to. The stock has gained 12.5% in the period compared with the industry’s 5.1% growth.



Let’s see, how things have shaped up for the upcoming quarterly announcement.

Factors to Influence Q2

AB Volvo, in its first-quarter earnings release, noted that strong service business and high volume flexibility are key factors for the company to be resilient to business environmental changes. The company’s move to enhance customers’ up-time along with strong global demand for transports are likely to continue to make a positive impact on service revenues in the to-be-reported quarter. A stable supply chain along with greater deliveries has made the company’s industrial system more efficient.

In the Volvo Penta segment, the company is committed to grow into new customer segments with a novel and competitive product portfolio. The company is also focusing on building core business, improving quality and increasing efficiency throughout its supply chain.

The global construction equipment market has been consistently strong, especially in China. The company witnessed year-over-year global increase of 5% in machine deliveries in the last reported quarter. Higher sales volume and improvement in operational performance have contributed to its profitability.

AB Volvo Price and EPS Surprise

 

AB Volvo Price and EPS Surprise

AB Volvo price-eps-surprise | AB Volvo Quote

What the Zacks Model Says

Per our proven model, AB Volvo is likely to beat earnings estimates in the quarter to be reported. This is because a stock needs to have the right combination of the two key ingredients —  a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is the case here as you will see below:

Earnings ESP: The company has an Earnings ESP of +4.00%. The Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 52 and 50 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3, which when combined with a positive ESP makes us reasonably confident of a beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are other auto stocks worth considering, which have the right combination of elements to deliver an earnings beat this time around:

Group 1 Automotive, Inc. (GPI - Free Report) has an Earnings ESP of +0.73% and carries a Zacks Rank #3. It is slated to release second-quarter 2019 results on Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cummins Inc. (CMI - Free Report) has an Earnings ESP of +3.67% and currently carries a Zacks Rank of 3. It is slated to release second-quarter 2019 results on Jul 30.

Penske Automotive Group, Inc. (PAG - Free Report) has an Earnings ESP of +0.42% and currently carries a Zacks Rank of 3. It is slated to release second-quarter 2019 results on Jul 30.

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