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What's in Store for Ferrari (RACE) this Earnings Season?

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Ferrari N.V. (RACE - Free Report) is set to report second-quarter 2017 results before the market opens on Aug 2. Last quarter, the company delivered a positive earnings surprise of 30.19%. It also surpassed estimates in each of the trailing four quarters, with an average beat of 31.16%.

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

Ferrari N.V. Price and EPS Surprise

 

Factors Influencing This Quarter

Ferrari, a former subsidiary of Fiat Chrysler Automobiles N.V. (FCAU ), has diversified its revenue sources and generates majority of the same from selling luxury cars, engines and Ferrari brand merchandise. The company also owns a Formula 1 racing team as well as theme parks.

However, Ferrari is facing challenges due to recalls related to the Takata airbags. The company has been increasing recalls and has also raised an expected expenditure on that front.

Earnings Whispers

Our proven model does not conclusively show that Ferrari is likely to beat on earnings 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: The Earnings ESP for Ferrari is -6.06% as the Most Accurate estimate of 62 cents is pegged below the Zacks Consensus Estimate of 66 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ferrari carries a Zacks Rank #2, which increases the predictive power of ESP. However, the stock’s ESP of -6.06% doesn’t make us confident about a positive earnings surprise.

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

Price Performance

Ferrari’s stock has surged 70.3% in the last six months, thereby substantially outperforming the 11.4% gain of the industry it belongs to.



Stocks to Consider

Per our model, some other top-ranked companies worth considering from the same space with the right combination of elements to come up with an earnings beat this quarter, are as follows:

Cummins Inc. (CMI - Free Report) has an Earnings ESP of +3.10% and carries a Zacks Rank #2. The company is expected to report second-quarter 2017 results on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical Corporation (WLK - Free Report) has an Earnings ESP of +5.04% and carries a Zacks Rank #2. Its second-quarter 2017 financial results are expected to release on Aug 3.

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 financial results are expected to release on Aug 1.

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