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What's in Store for Panasonic (PCRFY) This Earnings Season?

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Panasonic Corporation (PCRFY - Free Report) is scheduled to report third-quarter fiscal 2021 (ended Dec 30, 2020) results on Feb 2. In the September quarter, the company delivered an impressive earnings surprise of 242.9%. The company has a trailing four-quarter earnings surprise of 10.1%, on average.

Given a considerable decline in investment and consumption, the Japan-based multinational electronics company is expected to have recorded lower revenues on a year-over-year basis owing to the COVID-induced macroeconomic woes. Although Panasonic witnessed strong demand for air purifiers and power storage systems, used in communication infrastructure across global markets, its consolidated results are likely to be affected by weak domestic and international sales due to the widespread impact of the deadly disease.

Factors at Play

During the quarter under review, Panasonic conducted a field trial of compact, low-speed robot delivery service in Fujisawa Sustainable Smart Town in Fujisawa City, Kanagawa Prefecture. The test includes two phases. The first phase has already been commenced in November 2020 and the second phase, which involves the robotic home delivery service, will start from February 2021. This out-of-the box initiative is touted as one of the most innovative moves to address the new normal of contactless interactions, especially with an upsurge in e-commerce services amid the COVID-19 pandemic. This is likely to be positively reflected in the upcoming results.

As a leading provider of mobility solutions, the company unveiled an avant-garde cloud-based battery management service. Dubbed ‘Universal Battery Management Cloud’, the service capitalizes on a proprietary AI-based technology that is expected to resolve battery-related issues in e-mobility vehicles with utmost ease. Panasonic collaborated with an American software company, Blue Yonder, to enhance sales and operations strategy of the Mobile Solutions Business Division for reinforcing its competitiveness in the global market.

With a target of achieving net-zero CO2 emissions by 2050, the company extended its relationship with the Government of Costa Rica by operating the country’s first renewable energy-driven factory. It also inked a strategic agreement with industrial group Hydro and energy company Equinor to evaluate the market conditions for lithium-ion batteries, while establishing an integrated value chain in a cost-competitive battery business in the European region.

Further, as part of Mid-Term strategy, Panasonic’s board of directors committed to transition itself into a holding company to fortify the management structure in a way that will lead to significant profit growth. The transition is planned for April 2022 and is subject to approval from relevant government agencies.

Despite such profitability improvement initiatives on the back of technological innovations, accretive collaborations and sustainability goals, Panasonic’s reportable segments — Appliances, Life Solutions, Connected Solutions, Automotive and Industrial Solutions — are likely to have been hardly hit by supply chain disruptions and lower sales volume led by evolving market conditions due to COVID-19 adversities. Deconsolidation of housing-related businesses might have been a major headwind as well. As a result, the company does not feel confident enough to forecast the economic outlook for fiscal 2021.

For the December quarter, the Zacks Consensus Estimate for adjusted earnings per share stands at 25 cents, which suggests a decline of 16.7% from the prior-year recorded figure.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Panasonic this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Panasonic’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 25 cents.

Zacks Rank: The company currently carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Panasonic Corp. Price and EPS Surprise

Panasonic Corp. Price and EPS Surprise

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Littelfuse, Inc. (LFUS - Free Report) is slated to release fourth-quarter 2020 results on Feb 3. It has an Earnings ESP of +5.02% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Waddell & Reed Financial, Inc. is scheduled to release fourth-quarter 2020 results on Feb 2. The company has an Earnings ESP of +5.11% and carries a Zacks Rank #1, at present.

Sensata Technologies Holding plc (ST - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank of 1. The company is set to report fourth-quarter 2020 results on Feb 2.

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Sensata Technologies Holding N.V. (ST) - free report >>

Littelfuse, Inc. (LFUS) - free report >>

Panasonic Corp. (PCRFY) - free report >>