Auto Stocks' Earnings Roster for Aug 1: TSLA, RACE & More

Several Auto companies, including some big players, have already released their earnings in the past week. In the last couple of days, BorgWarner Inc. BWA and The Goodyear Tire & Rubber Company GT reported an earnings beat for the second quarter. A few important companies, which are slated to announce their quarterly numbers on Aug 1, are Tesla, Inc. TSLA, Ferrari N.V. RACE, Fox Factory Holding Corporation FOXF and Meritor, Inc. MTOR.

Per the latest Earnings Preview, as of Jul 27, 139 companies under the S&P 500 category have already announced quarterly results. These companies recorded estimate beat ratios of 80.8% and 72.1% in earnings and revenues, respectively.

On a year-over-year basis, the auto sector’s earnings are expected to decline 13.9% while revenues are likely to gain 2.1%. However, the S&P 500 companies are estimated to record a respective 23.6% and 8.8% year-over-year rise in earnings and revenues in the quarter under review.

Robust economic conditions, driven by a favorable job market and tax cuts, have enabled the auto sector to witness sales growth in the first half of 2018. Additionally, the frequent launch of newer and technologically-enhanced vehicle models, along with huge discounts, aided the companies in attracting customers, thus, driving the top line.

With an eye on the future demand drivers of the sector, almost all the auto companies are making efforts for the development of electric and autonomous vehicles. Huge investments, owing to high R&D expenses for these technological developments, are hurting profit margins for the companies. In order to keep up with their technological innovations, while opting for cost reductions, the auto companies are opting for partnerships.

That said, let’s take a look at the four auto companies, which are scheduled to announce their results tomorrow.

We relied on the proven Zacks quantitative model, combining a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) with a positive Earnings ESP, to predict the chances of an earnings beat this quarter.

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

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

Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that with an ideal combination of the two key ingredients — Zacks Rank and Earnings ESP — chances of a positive surprise are as high as 70% for the stocks lined up for an earnings release.

Palo Alto, CA-based Tesla engages in designing and manufacturing electric cars, solar energy generation systems and energy storage product. During the to-be-reported quarter, the company managed to witness a 55% sequential rise in Model 3 production to 53,339 vehicles. Rise in production has helped Tesla in clearing delivery backlogs to an extent, which is also expected to drive its second-quarter revenues. However, high costs associated with Model 3 production ramp-up might negatively impact the quarterly results.

In the last reported quarter, the company outpaced the Zacks Consensus Estimate. In the trailing four quarters, the company beat earnings estimates thrice and missed once. It has a long-term earnings growth rate of 30%. Our proven model does not conclusively predict an earnings beat for Tesla. This is because it has an Earnings ESP of -1.51% and a Zacks Rank of 3. (Read more: Will Progress in Production Aid Tesla's Q2 Earnings?)

Tesla, Inc. Price and EPS Surprise

Tesla, Inc. Price and EPS Surprise | Tesla, Inc. Quote

Italian automaker, Ferrari engages in designing and manufacturing sports cars. The company has more than 60 markets worldwide through a network of 180 authorized dealers. In the last reported quarter, the company delivered a positive earnings surprise of 3.9%.

The company has a long-term growth rate of 17.3%. Our proven model does not conclusively predict an earnings beat for Ferrari. This is because it has an Earnings ESP of +5.03% and a Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Ferrari N.V. Price and EPS Surprise

Ferrari N.V. Price and EPS Surprise | Ferrari N.V. Quote

California-based Fox Factory designs and manufactures performance-defining ride dynamic products for bicycles, on-road and off-road vehicles as well as trucks. In the last reported quarter, the company recorded an earnings beat. In fact, the company exceeded estimates in all the trailing four quarters, with an average beat of 7.7%.

The company has a long-term growth rate of 15.8%. Per our model, it seems that Fox Factory is likely to beat on earnings this quarter, as the company has an Earnings ESP of +1.05% and a Zacks Rank of 2.

Fox Factory Holding Corp. Price and EPS Surprise

Fox Factory Holding Corp. Price and EPS Surprise | Fox Factory Holding Corp. Quote

Troy, MI-based Meritor supplies a broad range of integrated systems, modules and components for commercial, and specialty vehicles worldwide. In the last reported quarter, the company delivered a positive earnings surprise of 15.4%. In fact, the company surpassed earnings estimates in all the trailing four quarters, recording an average beat of 31.9%.

Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of -2.15% and a Zacks Rank of 3.

Meritor, Inc. Price and EPS Surprise

Meritor, Inc. Price and EPS Surprise | Meritor, Inc. Quote

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Ferrari N.V. (RACE) : Free Stock Analysis Report
 
The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report
 
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