Auto Stocks' Q3 Earnings Queued Up for Oct 23: PCAR & HOG

With the onset of third-quarter 2018 earnings releases across sectors, several Auto companies have also scheduled to release their earnings this week. In the last couple of days, two important auto companies — Genuine Parts Company GPC and WABCO Holdings Inc. WBC — announced their quarterly reports. Genuine Parts reported earnings miss while WABCO surpassed estimates.

Among a number of auto companies scheduled to release earnings this week, PACCAR Inc. PCAR and Harley-Davidson, Inc. HOG scheduled their third-quarter earnings on Oct 23.

Per the latest Earnings Preview, as of Oct 17, 51 companies under the S&P 500 category already announced quarterly results. These companies recorded estimate beat ratios of 88.2% and 66.7% for earnings and revenues, respectively.

On a year-over-year basis, the auto sector’s earnings are expected to decline 4.2% while revenues are likely to gain 4.6%. However, the S&P 500 companies are estimated to record respective 19% and 7.2% year-over-year rise in earnings and revenues in the quarter under review.

Year to date, robust economic conditions, driven by a favorable job market, has led to steady demand for vehicles across key regions. Most of the automakers witnessed rise in the top line, driven majorly by increasing sales of larger and comfortable pickup trucks, sports utility vehicles (SUVs) and crossovers. However, this increase has been partially offset by a continuous decline in demand for traditional passenger cars.

Further, ongoing trade and tariff disputes, rising interest rates, and higher vehicle prices are likely to hamper sales for the auto sector. Additionally, over the past few months, many automakers have recalled vehicles in huge numbers from across the globe. Repairing defective vehicles will lead to increased costs for the companies, thus, pressurizing their profit margins. Moreover, huge investments for technological developments in vehicles and increased tariff rates leading to high raw material costs are hurting profit margins for the companies.

That said, let’s take a look at the two 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 stocks lined up for an earnings release.

Milwaukee, WI-based Harley-Davidson manufactures and sells custom, cruiser and touring motorcycles. At present, the company is working on several initiatives to expand its presence in international markets and revive U.S. business through investments. Our proven model does not conclusively predict an earnings beat for Harley-Davidson. This is because it has an Earnings ESP of -2.13% and a Zacks Rank #3.

In the last reported quarter, Harley-Davidson outpaced estimates. Additionally, in the last four quarters, the company surpassed estimates thrice while meeting once. Further, it has a long-term earnings growth rate of 8%. (Read more: Harley-Davidson Q3 Earnings: What's in the Offing?)

Harley-Davidson, Inc. Price and EPS Surprise

Harley-Davidson, Inc. Price and EPS Surprise | Harley-Davidson, Inc. Quote

Headquartered in Bellevue, WA, PACCAR engages in designing, manufacturing and providing customer support of premium light, medium and heavy-duty trucks. Further, it produces advanced diesel engines and distributes truck parts. In the last reported quarter, the company pulled off a positive surprise. Further, it exceeded estimates in all of the trailing four quarters, with an average beat of 8%.

PACCAR has a long-term growth rate of 10.8%. Per our model, it has chances of beating earnings estimates this quarter as it has an Earnings ESP of +1.21% and a Zacks Rank of 3. (Read More: PACCAR to Report Q3 Earnings: Is a Beat in Store?)

PACCAR Inc. Price and EPS Surprise

PACCAR Inc. Price and EPS Surprise | PACCAR Inc. Quote

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PACCAR Inc. (PCAR) : Free Stock Analysis Report
 
Wabco Holdings Inc. (WBC) : Free Stock Analysis Report
 
Genuine Parts Company (GPC) : Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
 
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