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LKQ Corp (LKQ) to Report Q4 Earnings: What Lies Ahead?

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LKQ Corporation (LKQ - Free Report) is slated to release fourth-quarter 2020 results on Feb 18, before market open. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 59 cents per share on revenues of $2.88 billion.

This aftermarket auto parts distributor delivered stellar earnings in the last reported quarter on higher-than-anticipated revenues from the parts and services segment in North America and Europe.

The company surpassed estimates in all of the preceding four quarters, the average beat being 86.35%. This is depicted in the graph below:

LKQ Corporation Price and EPS Surprise

LKQ Corporation Price and EPS Surprise

LKQ Corporation price-eps-surprise | LKQ Corporation Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for LKQ Corporation’s fourth-quarter earnings per share witnessed northbound revision of two cents in the past 60 days. Moreover, this compares favorably with the year-ago quarter’s earnings of 54 cents per share, indicating a 9.26% rise, year on year. However, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year fall of 4.35%.

Earnings Whispers

Our proven model predicts an earnings beat for LKQ Corporation this time around. 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.

Earnings ESP: LKQ Corporation has an Earnings ESP of +5.48%. This is because the Most Accurate Estimate is pegged three cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: LKQ Corporation currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

With the economy gradually recovering from the disruptions caused by the coronavirus pandemic, auto sales across the globe have managed to recover steadily, highlighted by the rebounding demand for new vehicle sales.

Markedly, the consensus estimate for revenues from parts and services in North America for the October-December quarter is pegged at $1,014 million, suggesting a rise from the $1,007 million recorded in the previous quarter. This is likely to have fueled the top line during the to-be-reported quarter.
 
Also, the Zacks Consensus Estimate for quarterly revenues from the specialty segment is pinned at $320 million, calling from growth from the $303.4 million reported in the prior-year quarter. This projected uptick is likely to have boosted the company’s revenues during the December-end quarter.  

Also, LKQ Corporation’s cost-containment efforts are anticipated to have been conducive to its performance during the period in discussion.

In fact, LKQ Corporation’s strategic acquisitions and divestments have aided in streamlining the company’s product portfolio and buoyed its long-term prospects. The firm frequently acquires companies to expand its geographic footprint, improve customer offering and adopt new technologies. The positive impacts of these frequent buyouts are likely to have been reflected in the fourth-quarter margins.

However, the Zacks Consensus Estimate for quarterly revenues from parts and services in Europe, which has the highest contribution to the company’s revenues, is pegged at $1,421 million. This indicates a slight fall from the $1,424.9 million reported in the year-ago quarter. The decline is likely to have hurt the company’s quarter performance during the quarter under review.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Dana Incorporated (DAN - Free Report) has an Earnings ESP of +5.56% and flaunts a Zacks Rank #1 at present. The company will announce fourth-quarter 2020 results on Feb 18.

Gentherm Inc (THRM - Free Report) has an Earnings ESP of +3.88% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on Feb 19.

Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release earnings results on Feb 19.

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Magna International Inc. (MGA) - free report >>

Gentherm Inc (THRM) - free report >>

Dana Incorporated (DAN) - free report >>

LKQ Corporation (LKQ) - free report >>