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Is Toyota (TM) Likely to Disappoint Q1 Earnings Estimates?

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Toyota Motor Corporation (TM - Free Report) is set to report first-quarter fiscal 2015 (ending Jun 30, 2014) financial results on Aug 5, 2014. Last quarter, this Japanese auto manufacturer had posted a –6.12% surprise. Let us see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

Toyota was the leading automaker in terms of global sales in the first half of 2014. The company projects global sales volume of 10.32 million units in 2014, up 4% from 2013. The strong sales volumes translate into improved earnings as well. Moreover, the improving balance sheet and profitability allowed Toyota to announce a repurchase plan for 30 million shares in Mar 2014, which should have a positive impact on earnings per share.

However, Toyota’s net earnings are expected to fall 2.4% to ¥1.78 trillion ($17.8 billion) or ¥$561.56 ($5.62) per share in fiscal 2015. Consolidated vehicle sales are also expected to decrease to 9.10 million units from 9.12 million in fiscal 2014. Consolidated revenues are estimated to be ¥25.7 trillion ($257 billion), in line with fiscal 2014.

Earnings Whispers?

Our proven model does not conclusively show that Toyota is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Toyota has an Earnings ESP of 0.00%. That is because the Most Accurate estimate and the Zacks Consensus Estimate both currently stand at $3.07 per share.

Zacks Rank: Toyota currently has a Zacks Rank #2 (Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Visteon Corporation (VC - Free Report) , with an ESP of +10.67% and Zacks Rank #3 (Hold), is a stock in the auto sector that is expected to beat earnings this season. The company will report second-quarter results on Aug 6, 2014.

Cooper Tire & Rubber Co. (CTB - Free Report) will release second-quarter earnings on Aug 7, 2014. The company carries a Zacks Rank #1 (Strong Buy).

Magna International Inc. (MGA - Free Report) will post second-quarter results on Aug 8, 2014. The company has a Zacks Rank #2.

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