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What Is Common Between AMX, ONEW and THRM?

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We’re in the thick of earnings season and the story remains much the same, i.e. companies are surprising more positively than not and estimates are going up. Of the 114 S&P 500 members that have reported results so far, 83.3% beat on the bottom line while 77.2% beat on the top line.

Naturally, this fueled positive estimate revisions. So while first quarter 2021 earnings were expected to grow 11.7% on Dec 9, we are now looking for a 14.3% increase.

This in turn continues to fuel investor appetite for shares, thus keeping the markets buoyant.

The most recent earnings reports seem to indicate that the recovery is broad-based. But while a number of sectors are looking up, the auto, retail, medical, construction and tech sectors remain a cut above the rest.

With that being the backdrop, I thought it would be interesting to take a look at three names that are set to report over the next few weeks.

America Movil, S.A.B. de C.V. (AMX - Free Report) , OneWater Marine Inc. (ONEW - Free Report) and Gentherm Inc. (THRM - Free Report) operate in completely different industries.

These “industries” we’re talking about are according to the Zacks classification. Zacks also allots a rank to each industry, based on how the players within that industry are likely to perform. So it has been seen historically that the top 50% of Zacks-ranked industries generally outperform the bottom 50% by a factor of 2 to 1.

Also, roughly half the appreciation in a company’s shares is attributable to the industry that it’s in. So this is an important factor to consider when choosing shares. 

AMX (Wireless Non-US industry – top 39%), ONEW (Leisure and Recreation Products – top 6%) and THRM (Automotive - Original Equipment industry – top 36%) operate in attractive industries.

But individual players have also been allotted the Zacks Rank, because it harnesses the power of earnings estimate revisions to generate massive returns (it doubled the returns on the S&P 500 in the last few decades).

All three companies carry a Zacks Rank #1 (Strong Buy).

To narrow things down further, you may want to look at the VGM Score, or the Value, Growth and/or momentum Scores that are its components, depending on the kind of stocks you’re looking for and your risk appetite (a score of A is the best).

All three have a VGM Score A or B.

America Movil is Latin America’s largest wireless company, with more than 362 million subscribers across 25 countries.

AMX was badly hit by the pandemic, which led to a loss in the March quarter. Results continued to improve thereafter with the December quarter estimate jumping 29 cents to 40 cents 60 days ago. Since the company reported earnings of 33 cents in the December quarter of 2019, this is a big comeback, if it doesn’t disappoint. The earnings ESP (expected surprise prediction) is at 0.00%, which along with the Zacks Rank seems to indicate that there’s a fair chance of its beating estimates.

The earnings estimate for 2021 is currently $1.18, representing a 97.2% increase from 2020.

The company is expected to report results on Feb 9.

OneWater Marine is a retailer of premium recreational boats, both new and pre-owned, and a provider of ancillary services.

ONEW too did very badly in the March 2020 quarter and has been improving since. Its bounce-back came in the September quarter itself when it beat the Zacks Consensus Estimate by 29 cents, or 47.5%. The consensus for December is now 11 cents, having increased steadily in each of the last few months (it was a penny 90 days ago). But this is still short of the most recent estimate of 20 cents, indicating positive catalysts that should result in another solid earnings beat when the company reports on Feb 4.

The earnings estimate for 2021 is $3.99, representing an increase of 11.1% from 2020. There may have been a more substantial increase if the company had the easy comps that some other companies do. But its fiscal year ends in September, the quarter in which it saw a resurgence in demand.

Gentherm offers heated seating, climate seating, electronics and cables for the automotive market and is developing thermoelectric generators for converting heat into electricity for applications in automotive, industrial and materials sectors.

While results weakened considerably in the June quarter, they were still significantly better than expected. And there was a sharp bounce-back in the following quarter. Reported earnings/loss have consistently topped the Zacks Consensus by significant margins, averaging 65.8% in the preceding four quarters.

For quarter four, the consensus is at 65 cents, which is up from 53 cents 90 days ago, but still below the most recent estimate of 67 cents. So there should be an earnings beat when the company reports on Feb 17.

For 2021, the Zacks Consensus Estimate is currently $2.56, representing an increase of 44.5% from 2020.

Bottom Line

There is every reason to believe that these companies will report strong results and possibly, earnings beats, given their recent history and the estimate revision trend. So buying the shares at this point makes sense, especially considering their reasonable valuations.


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America Movil, S.A.B. de C.V. (AMX) - free report >>

Gentherm Inc (THRM) - free report >>

OneWater Marine Inc. (ONEW) - free report >>