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Honda (HMC) Q2 Earnings: What???s in Store for the Stock?
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Honda Motor Co., Ltd. (HMC - Free Report) is expected to report second-quarter fiscal 2018 (ended Sep 30, 2017) results on Nov 1. Last quarter, the company delivered a positive earnings surprise of 25.3%.
In fact, Honda delivered a positive earnings surprise in each trailing four quarter with an average beat of 69.2%.
Let’s see how things are shaping up for this announcement.
Honda has provided a weak guidance for fiscal 2018. Its operating income is projected to decline 16.1% to ¥705 billion ($6.71 billion) from fiscal 2016. Net income is also likely to decrease 14% to ¥530 billion ($5.05 billion) or ¥294.07 ($2.83) per share, resulting into a plunge of 48% year over year.
Also, the stock has seen the Zacks Consensus Estimate for second-quarter fiscal 2018 earnings being revised 22% downward over the last 30 days.
In September, the company agreed to a $605 million legal settlement over faulty Takata air-bag inflators that caused numerous deaths and injuries. Of the total amount, a portion will be used to look out for vehicle owners with unrepaired cars and encourage them to replace the inflators. While rest of the money will be paid for attorney fees and reimbursing owners, who suffered losses due to the defective air-bag issue. These technical glitches not only reduce consumers’ confidence in a brand but also add to its expenses.
However, the company has plans to launch two fully-electric vehicles in 2018 with a view to compete with its peers. Of the two, one will be for the Chinese market and the other, for the European.
These electric-vehicle introductions are in line with Honda’s Vision 2030 strategy plan, which announced an increasing research and development effort for electric vehicles and self-driving technology. Further, the company also aims at electrifying two-third of its automobiles by 2030.
Earnings Whispers
Our proven model does not conclusively show that Honda is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: Honda has an Earnings ESP of 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 49 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Honda carries a Zacks Rank #4 (Sell). We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering from the same space with the right combination of elements to come up with an earnings beat in their respective quarters:
Meritor, Inc. has an Earnings ESP of +4.26% and flaunts a Zacks Rank of 1. The company’s fourth-quarter 2017 results are expected to release on Nov 15.
Adient plc (ADNT - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #2. The company’s fourth-quarter 2017 results are expected to release on Nov 2.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Honda (HMC) Q2 Earnings: What???s in Store for the Stock?
Honda Motor Co., Ltd. (HMC - Free Report) is expected to report second-quarter fiscal 2018 (ended Sep 30, 2017) results on Nov 1. Last quarter, the company delivered a positive earnings surprise of 25.3%.
In fact, Honda delivered a positive earnings surprise in each trailing four quarter with an average beat of 69.2%.
Let’s see how things are shaping up for this announcement.
Honda Motor Company, Ltd. Price and EPS Surprise
Honda Motor Company, Ltd. Price and EPS Surprise | Honda Motor Company, Ltd. Quote
Factors Influencing This Quarter
Honda has provided a weak guidance for fiscal 2018. Its operating income is projected to decline 16.1% to ¥705 billion ($6.71 billion) from fiscal 2016. Net income is also likely to decrease 14% to ¥530 billion ($5.05 billion) or ¥294.07 ($2.83) per share, resulting into a plunge of 48% year over year.
Also, the stock has seen the Zacks Consensus Estimate for second-quarter fiscal 2018 earnings being revised 22% downward over the last 30 days.
In September, the company agreed to a $605 million legal settlement over faulty Takata air-bag inflators that caused numerous deaths and injuries. Of the total amount, a portion will be used to look out for vehicle owners with unrepaired cars and encourage them to replace the inflators. While rest of the money will be paid for attorney fees and reimbursing owners, who suffered losses due to the defective air-bag issue. These technical glitches not only reduce consumers’ confidence in a brand but also add to its expenses.
However, the company has plans to launch two fully-electric vehicles in 2018 with a view to compete with its peers. Of the two, one will be for the Chinese market and the other, for the European.
These electric-vehicle introductions are in line with Honda’s Vision 2030 strategy plan, which announced an increasing research and development effort for electric vehicles and self-driving technology. Further, the company also aims at electrifying two-third of its automobiles by 2030.
Earnings Whispers
Our proven model does not conclusively show that Honda is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: Honda has an Earnings ESP of 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 49 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Honda carries a Zacks Rank #4 (Sell). We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering from the same space with the right combination of elements to come up with an earnings beat in their respective quarters:
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +3.99% and a Zacks Rank #3. The company is expected to report third-quarter 2017 results on Nov 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meritor, Inc. has an Earnings ESP of +4.26% and flaunts a Zacks Rank of 1. The company’s fourth-quarter 2017 results are expected to release on Nov 15.
Adient plc (ADNT - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #2. The company’s fourth-quarter 2017 results are expected to release on Nov 2.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>