In the past week, two Auto giants — Tesla, Inc. (TSLA - Free Report) and Autoliv, Inc. (ALV - Free Report) — announced their numbers for fourth-quarter 2018. The companies reported an earnings miss.
Per the latest Earnings Preview, on a year-over-year basis, the auto sector’s earnings are expected to decline 15.3%, while revenues are likely to decrease 1.7%.
In fourth-quarter 2018, rise in employment rate, sturdy consumer confidence, and rise in income and wages boosted auto demand. Majority of the automakers witnessed rise in demand for roomier and comfortable pickup trucks, sports utility vehicles (SUVs) and crossovers. However, this rise was partially offset by continued decline in demand for traditional passenger cars.
Further, declining demand in China, unresolved trade and tariff spats, rising interest rates, and higher vehicle prices are hurting sales for the auto sector. Further, over the past few months, many automakers have recalled vehicles in large numbers from across the world.
Let’s take a look at the two auto companies, which are scheduled to announce results tomorrow.
Our research shows that with the combination of the two key ingredients, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, raises chances of a positive surprise to as high as 70%. Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Here are two stocks lined up for reporting fourth-quarter 2018 earnings results on Feb 6.
Detroit, MI-based General Motors Company (GM - Free Report) is a leading global automotive company. It is engaged in designing, building, and selling of cars, trucks, crossovers and automobile parts worldwide. General Motors has a long-term earnings growth rate of 8.5%. In the last reported quarter, the company pulled off a positive surprise. Further, it surpassed estimates in three of the trailing four quarters, the average beat being 21.8%.
Our proven model predicts an earnings beat for General Motors. This is because it has an Earnings ESP of +11.39% and a Zacks Rank #2. (Read more: Is a Beat in Store for General Motors in Q4 Earnings?)
You can see the complete list of today’s Zacks #1 Rank stocks here.
Columbus, IN-based Cummins Inc. (CMI - Free Report) is a leading global designer, manufacturer and distributor of diesel and natural gas engines, electric power generation systems, and engine-related components, fuel systems, controls and air handling systems. Cummins has a long-term earnings growth rate of 12%. In the last reported quarter, the company pulled off a positive surprise. Further, it surpassed estimates in all the trailing four quarters, the average beat being 12.1%.
Our proven model does not conclusively predict an earnings beat for Cummins. This is because it has an Earnings ESP of +5.90% and a Zacks Rank #4 (Sell).
Zacks' Top 10 Stocks for 2019
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