Westport Fuel Systems Inc. (WPRT - Free Report) will report second-quarter 2017 results after the market closes on Aug 14. In the last quarter, the company beat earnings by 20%.
The company fell short of expectations in two of the trailing four quarters, with an average miss of 20.67%.
Over the next three to five years, the long-term EPS growth rate for the company is pegged at 30%. Westport Fuel Systems outperformed the industry it belongs to in the last three months. The company’s share price has increased 40%, while the industry grew 7.1%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Westport Fuel Systems regularly launches new products to enhance sales. Moreover, the company has strategic relationships with engine producers, truck manufacturers as well as automotive producers. These relations enable the company to utilize its collaborators’ production plants, supply chains, back office systems as well as distribution and sales networks, thereby helping in significant cost savings.
Westport Fuel Systems regularly makes investments and acquisitions related to technologies and businesses that help in the commercialization of its products. The company also completed the merger agreement with Fuel Systems Solutions, Inc. This merger will lead to a stronger balance sheet, better liquidity, cost reduction, technology consolidation, a wider product portfolio and a large global distribution network.
However, Westport Fuel Systems has been incurring losses for the past several years due to high operating expenses. The company’s CWI joint venture has also been facing challenges due to an industry decline in truck volumes. Further, Westport Fuel Systems faces challenges due to fluctuations in exchange rates and economic volatility in some markets.
Our proven model does not conclusively show that Westport Fuel Systems is likely to beat estimates this time around. 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 Westport Fuel Systems is 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at a loss of 15 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Westport Fuel Systems carries a Zacks Rank #2. Though a Zacks Rank #2 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Applied Industrial Technologies, Inc. (AIT - Free Report) is expected to release fiscal 2017 fourth quarter and year-end financial results on Aug 11, 2017. The company sports a Zacks Rank #3 and has an Earnings ESP of +1.30%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Coach, Inc. (COH - Free Report) is expected to release fourth quarter and fiscal year 2017 results on Aug 15. The company carries a Zacks Rank #3 and has an Earnings ESP of +2.04%.
The Gap, Inc. (GPS - Free Report) , a Zacks Rank #2 stock, has an Earnings ESP of +3.85%. The company is expected to report its second-quarter financial numbers on Aug 17.
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