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Will North American Unit Drive LKQ Corp. (LKQ) Q4 Earnings?

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LKQ Corporation (LKQ - Free Report) is slated to release fourth-quarter 2019 results on Feb 20, before the opening bell. The Zacks Consensus Estimate for the quarter to be reported is earnings of 52 cents per share on revenues of $3 billion.

The aftermarket auto parts distributor came up with better-than-expected results in the last reported quarter on the back of higher-than-anticipated profits from the North American segment. As far as earnings surprises are concerned, the company managed to surpass estimates in three of the trailing four quarters, with the average positive surprise being 2.1%.

LKQ Corporation Price and EPS Surprise

 

LKQ Corporation Price and EPS Surprise

LKQ Corporation price-eps-surprise | LKQ Corporation Quote

Investors are expecting LKQ Corp. to top earnings estimates this time around as well. Encouragingly, our model also indicates the same.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share has remained stable over the past 60 days. The estimated figure indicates 8.3% increase from the year-ago reported earnings. The Zacks Consensus Estimate for revenues is pegged at $3,015 million, suggesting a nominal increase from the prior-year reported figure of $3,003 million.

Factors Setting the Tone

With growth in U.S. used-car vehicle markets and increase in the average number of automobiles, the company is likely to have benefited from revenue growth in North America. LKQ Corp.’s strategic buyouts are likely to positively reflect on the to-be-reported quarter’s results. During the fourth quarter, the company closed the acquisition of another diagnostics and calibration business in North America. This is also expected to have driven the top line of the firm.  Further, healthy demand for light trucks and SUVs is expected to have positively contributed to the Specialty segment’s revenues. Favorable dynamics for the recreational vehicles (RV) business and RV replacement parts offerings are likely to have bolstered the company’s growth. 

However, challenging macroeconomic environment in Europe is likely to have negatively impacted its overall consumer demand in the United Kingdom. With Europe being a major market for LKQ Corp., lower vehicle sales amid weakening consumer demand and soft economic conditions are expected to have hampered the firm’s top line. Nonetheless, solid contribution from North American and Specialty segments, along with operational efficiency are likely to have offset the softness of the European unit.

Earnings Whispers

Our proven model predicts an earnings beat for LKQ Corp. this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

LKQ Corp. has an Earnings ESP of +1.68% and a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are some other stocks, which, according to our model, also have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Visteon Corporation (VC - Free Report) is set to release quarterly numbers on Feb 20. The company has an Earnings ESP of +2.63% and carries a Zacks Rank of 3, at present.

Magna International Inc. (MGA - Free Report) has an Earnings ESP of +3.34% and is a Zacks #3 Ranked player. The company is slated to report quarterly results on Feb 21.

Applied Optoelectronics, Inc. (AAOI - Free Report) is set to release quarterly numbers on Feb 27. The company has an Earnings ESP of +8.12% and carries a Zacks Rank #3, currently.

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