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What's Ahead for These Auto Stocks in Q2 Earnings? ALV, GNTX

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The Q2 earnings season is in the initial stage for the auto sector, although nearly 7.2% of the S&P 500 members have already reported results as of the end of last week. Last quarter, auto sector companies witnessed impressive year-over-year earnings growth of 52.4% and revenue growth of 4.5%.

Q2 is expected to be weaker in comparison, with earnings and revenue growth projections of 8.3% and 1.8%, respectively, per our Earnings Preview report. However, considering that total S&P 500 earnings and revenues are expected to decline 5.4% and 0.5% year over year, respectively, the auto sector seems to be better placed than others.

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 weigh upon 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 major headwind for the auto sector.

Among the many stocks lined up to report this week, let’s see what awaits these two auto sector companies slated to release their second-quarter 2016 results on Jul 22.

Autoliv, Inc. (ALV - Free Report) carries a Zacks Rank #3 (Hold). Earnings ESP for the company is currently pegged at -1.14% as the Most Accurate estimate of $1.73 stands below the Zacks Consensus Estimate of $1.75. We note that the company delivered positive earnings surprises in each of the last four quarters. This resulted in an average beat of 8.37%.

AUTOLIV INC Price and EPS Surprise

AUTOLIV INC Price and EPS Surprise | AUTOLIV INC Quote

Gentex Corp. (GNTX - Free Report) has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is currently pegged at 29 cents. Gentex surpassed earnings estimates in one of the last four quarters and posted in-line results in the other three. This resulted in a positive average surprise of 2.78%.

GENTEX CORP Price and EPS Surprise

GENTEX CORP Price and EPS Surprise | GENTEX CORP Quote

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