As the busiest week of the Q2 earnings season crosses the halfway mark, we note that the auto sector has been performing well. As of Jul 22, nearly 27.3% of the sector’s companies had reported results. These companies recorded 30.4% year-over-year growth in earnings and 7.8% in revenues, per our Earnings Preview report. In comparison, total S&P 500 companies that had reported through Jul 22 posted a 1.1% decline in earnings and a 2.6% rise in revenues.
By the end of Q2, auto sector earnings and revenue growth is projected to be around 18.4% and 2.1%, respectively. Meanwhile, total S&P 500 earnings and revenues are expected to decline 3.4% and 0.5% year over year, respectively.
Revenues of auto companies are being driven by strong sales in major markets like the U.S., Europe and China, in the first half of 2016. Meanwhile, the bottom line is benefiting from an increase in the sales of higher margin vehicle segments, such as SUVs and light trucks, due to low fuel prices. Nonetheless, the pressure to maintain the attractive incentives and deals may strain the margins for automakers. Sluggishness in some markets and expenses related to safety recalls are other hurdles. The negative impact of foreign currency translation also remains a headwind for the auto sector.
Among the many stocks lined up to report this week, let’s see what awaits these five auto stocks slated to release their second-quarter 2016 results on Jul 28.
Ford Motor Co. (F - Free Report) carries a Zacks Rank #4 (Sell). Earnings ESP for the company is currently pegged at +3.33% as the Most Accurate estimate of 62 cents stands above the Zacks Consensus Estimate of 60 cents. We note that the company delivered positive earnings surprises in three of the last four quarters, with an average beat of 27.70% (read more: What's in the Cards for Ford this Earnings Season?)
Harley-Davidson, Inc. (HOG - Free Report) has an Earnings ESP of -0.65% and a Zacks Rank #3 (Hold). The Most Accurate estimate of $1.52 stands below the Zacks Consensus Estimate of $1.53. The company managed to beat earnings in three of the last four quarters with a positive average surprise of 3.53% (read more: Harley-Davidson: Will its Earnings Disappoint in Q2?)
Lear Corp. (LEA - Free Report) currently carries a Zacks Rank #4. The company has an Earnings ESP of -3.88% because the Most Accurate estimate of $3.22 stands below the Zacks Consensus Estimate of $3.35. Lear Corp. surpassed earnings estimates in each of the last four quarters. This resulted in a positive average surprise of 13.05%.
BorgWarner Inc. (BWA - Free Report) has an Earnings ESP of -1.22% and a Zacks Rank #4. The Most Accurate estimate is 81 cents, while the Zacks Consensus Estimate is pegged at 82 cents. BorgWarner beat earnings estimates in three of the trailing four quarters. However, the wide earnings miss in the second quarter of 2015 resulted in a negative average surprise of 0.35% (read more: Will BorgWarner's Q2 Earnings Disappoint Investors?)
Cooper-Standard Holdings Inc. (CPS - Free Report) carries a Zacks Rank #4. The Earnings ESP for the company is currently pegged at +0.86% as the Most Accurate estimate of $2.35 stands above the Zacks Consensus Estimate of $2.33. We note that the company delivered a positive earnings surprise in each of the last four quarters. This resulted in a positive average surprise of 52.48%.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
As the busiest week of the Q2 earnings season crosses the halfway mark, we note that the auto sector has been performing well. As of Jul 22, nearly 27.3% of the sector’s companies had reported results. These companies recorded 30.4% year-over-year growth in earnings and 7.8% in revenues, per our Earnings Preview report. In comparison, total S&P 500 companies that had reported through Jul 22 posted a 1.1% decline in earnings and a 2.6% rise in revenues.
By the end of Q2, auto sector earnings and revenue growth is projected to be around 18.4% and 2.1%, respectively. Meanwhile, total S&P 500 earnings and revenues are expected to decline 3.4% and 0.5% year over year, respectively.
Revenues of auto companies are being driven by strong sales in major markets like the U.S., Europe and China, in the first half of 2016. Meanwhile, the bottom line is benefiting from an increase in the sales of higher margin vehicle segments, such as SUVs and light trucks, due to low fuel prices. Nonetheless, the pressure to maintain the attractive incentives and deals may strain the margins for automakers. Sluggishness in some markets and expenses related to safety recalls are other hurdles. The negative impact of foreign currency translation also remains a headwind for the auto sector.
Among the many stocks lined up to report this week, let’s see what awaits these five auto stocks slated to release their second-quarter 2016 results on Jul 28.
Ford Motor Co. (F - Free Report) carries a Zacks Rank #4 (Sell). Earnings ESP for the company is currently pegged at +3.33% as the Most Accurate estimate of 62 cents stands above the Zacks Consensus Estimate of 60 cents. We note that the company delivered positive earnings surprises in three of the last four quarters, with an average beat of 27.70% (read more: What's in the Cards for Ford this Earnings Season?)
Harley-Davidson, Inc. (HOG - Free Report) has an Earnings ESP of -0.65% and a Zacks Rank #3 (Hold). The Most Accurate estimate of $1.52 stands below the Zacks Consensus Estimate of $1.53. The company managed to beat earnings in three of the last four quarters with a positive average surprise of 3.53% (read more: Harley-Davidson: Will its Earnings Disappoint in Q2?)
Lear Corp. (LEA - Free Report) currently carries a Zacks Rank #4. The company has an Earnings ESP of -3.88% because the Most Accurate estimate of $3.22 stands below the Zacks Consensus Estimate of $3.35. Lear Corp. surpassed earnings estimates in each of the last four quarters. This resulted in a positive average surprise of 13.05%.
BorgWarner Inc. (BWA - Free Report) has an Earnings ESP of -1.22% and a Zacks Rank #4. The Most Accurate estimate is 81 cents, while the Zacks Consensus Estimate is pegged at 82 cents. BorgWarner beat earnings estimates in three of the trailing four quarters. However, the wide earnings miss in the second quarter of 2015 resulted in a negative average surprise of 0.35% (read more: Will BorgWarner's Q2 Earnings Disappoint Investors?)
Cooper-Standard Holdings Inc. (CPS - Free Report) carries a Zacks Rank #4. The Earnings ESP for the company is currently pegged at +0.86% as the Most Accurate estimate of $2.35 stands above the Zacks Consensus Estimate of $2.33. We note that the company delivered a positive earnings surprise in each of the last four quarters. This resulted in a positive average surprise of 52.48%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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