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What's in the Cards for Fiat Chrysler (FCAU) in Q2 Earnings?

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Fiat Chrysler Automobiles N.V. (FCAU - Free Report) is set to report second-quarter 2017 results before the opening bell on Jul 27. The company reported one miss and three beats in the trailing four quarters, thereby delivering an average positive earnings surprise of 22.48%.

Let’s see how things are shaping up for this announcement.

Fiat Chrysler Automobiles N.V. Price and EPS Surprise


Factors Influencing this Quarter

For 2017, Fiat Chrysler projects revenues in the range of €115--€120 billion ($123.4--$128.8 billion), compared with the €111 billion earned in 2016. The company expects adjusted net profit of more than €3 billion ($3.2 billion), up from €2.52 billion recorded in 2016.

In May 2017, it has recalled over 1 million Dodge Ram pickup trucks due to a software error that could prevent side air bags from deploying and seatbelts from tightening. The recall includes about 1 million 2013-2016 Ram 1500 and 2500 pickups and 2014-2016 Ram 3500 pickups in the U.S. It has affected 216,007 vehicles in Canada, 21,668 in Mexico and 21,530 outside North America. Recalls along with the latest one might hurt the company’s finances.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Fiat Chrysler this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Fiat Chrysler is -6.56% as the Most Accurate estimate of 57 cents is below the Zacks Consensus Estimate of 61 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Fiat Chrysler carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company's negative ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Price Performance

Fiat Chrysler’s stock has rallied 11.5% in the last three months, substantially outperforming the 0.8% decline of the industry it belongs to.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to come up with an earnings beat this quarter:

Cummins Inc. (CMI - Free Report) has an Earnings ESP of +3.1% and carries a Zacks Rank #2. The company is expected to report its second-quarter 2017 results on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tenneco Inc. (TEN - Free Report) has an Earnings ESP of +1.67% and carries a Zacks Rank #3. The company’s second-quarter 2017 results are expected to release on Jul 28.

Horizon Global Corporation (HZN - Free Report) has an Earnings ESP of +2.99% and carries a Zacks Rank #3. The company’s second-quarter 2017 results are expected to release on Aug 1.

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