Yahoo Finance Auto Stocks' Q1 Earnings Queued for Apr 28: HOG, F, CMI & PII
The first-quarter earnings season for the Auto-Tires-Trucks sector kicked off last week. So far, two of the S&P 500 sector components — PACCAR PCAR and O’Reilly Automotive ORLY — have released their quarterly results. PACCAR missed earnings expectations in the quarter on lower income and revenues from the company’s trucks, parts and others unit. O’Reilly Automotive, meanwhile, topped earnings and revenue projections for the same time period.
In the last reported quarter, the auto sector’s earnings plunged 57.1% year over year on a 10.3% revenue decline. In the first quarter of 2020, overall earnings and revenues for the auto sector are projected to be down 82.2% and 13% year over year, per the latest Earnings Preview. In fact, the auto sector’s earnings are likely to decline the most among all the 16 sectors.
Let’s take a look at the factors that are likely to have impacted auto stocks during the to-be-reported quarter.
Key Factors
Automakers around the globe are likely to have struggled with declining car sales amid the economic-slowdown concerns due to the coronavirus pandemic. Confirmed cases of COVID-19 have exceeded 2.9 million globally, with the death toll crossing 207,000. Notably, vehicle sales from each of the Detroit 3 carmakers — Ford, General Motors and Fiat Chrysler — dropped year over year during the March-end quarter.
The pandemic has crippled the auto industry, with the closure of factories, dealerships witnessing lower footfall and disruptions in the global supply chains. Amid the virus-led uncertainties, several auto firms have withdrawn their annual guidance and are resorting to strategic cost-cut measures in a bid to preserve the financial flexibility. Dividend cuts, buyback suspensions, employee layoffs, pay cuts and hiring freezes have become commonplace.
The virus outbreak has resulted in unprecedented challenges for the auto sector, having created a demand shock as consumers’ confidence has dropped significantly. The coronavirus crisis is likely to have dented automakers’ earnings and sales in the quarter under review.
Key Releases on Apr 28
Let’s take a glance at how these four auto players are placed ahead of their quarterly results, slated for an Apr 28 release.
Harley-Davidson, Inc. HOG: In the last reported quarter, Harley Davidson came up with better-than-expected results on solid motorcycle sales in the Asia-Pacific region. The company beat estimates in each of the trailing four quarters, the average positive surprise being 27%.
Harley-Davidson, Inc. Price and Consensus
Harley-Davidson, Inc. price-consensus-chart | Harley-Davidson, Inc. Quote
Our proven model suggests that the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
However, things are not looking up for Harley Davidson as the firm currently carries a Zacks Rank #5 (Strong Sell) and has an Earnings ESP of +6.84%. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 40 cents per share on revenues of $1.07 billion.
Harley-Davidson’s efforts to launch lighter motorcycles and bolster its dealer networks are likely to have positively impacted the company’s first-quarter performance. Nonetheless, the company is expected to have witnessed a decline in sales volumes amid industry headwinds. Heightening coronavirus fears, especially in March, are likely to have thwarted vehicle demand. The Zacks Consensus Estimate for total motorcycle shipments is pegged at 56,517 units, suggesting a year-over-year decline of 4.03%. Further, the Zacks Consensus Estimate of revenues from motorcycle and related products is pegged at $1.13 billion, indicating a year-over-year decline of 5.52%. (Harley-Davidson to Post Q1 Earnings: What's in Store?)
Ford F: This U.S. auto biggie delivered weaker-than-expected results in the last reported quarter, primarily due to lower revenues across all major markets. Over the last four quarters, Ford beat estimates on three occasions and missed in the other, the average positive surprise being 19.3%.
Ford Motor Company Price and Consensus
Ford Motor Company price-consensus-chart | Ford Motor Company Quote
Ford has an Earnings ESP of -80.00% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the quarter’s earnings is a loss of 10 cents a share on revenues of $30.09 billion.
Decline in vehicle sales across all major markets served — North America, China and Europe — is likely to have weighed on Ford’s quarterly sales and earnings. Notably, the Zacks Consensus Estimate for revenues in the North American region is pegged at $23,237 million, indicating a decline from the year-ago figure of $25,400 million. Lower vehicle sales amid bleak demand for passenger cars and SUVs due to the coronavirus outbreak and stay-at-home orders across several states are likely to have marred revenues in the to-be-reported quarter. (How Badly Will Coronavirus Hit Ford's Q1 Earnings?)
Cummins Inc. CMI: This leading global designer of diesel and natural gas engines reported better-than-expected results in the fourth quarter of 2019 on solid contribution from the Components segment. Over the preceding four quarters, Cummins beat estimates on two occasions for as many misses, the average positive surprise being 5.7%.
Cummins Inc. Price and Consensus
Cummins Inc. price-consensus-chart | Cummins Inc. Quote
Cummins currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of +0.37%. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $2.16 per share on revenues of $4.95 billion.
A few of Cummins’ end markets are likely to have witnessed lower levels of industry production of trucks in the March-end quarter due to reduced build rates amid the pandemic. Notably, the Zacks Consensus Estimate for the engine segment’s quarterly net sales is pegged at $1,936 million, lower than the year-ago quarter’s $2,653 million. The EBITDA for the segment is estimated at $243 million, suggesting a 44.5% slump year over year. (What's in the Offing for Cummins This Earnings Season?)
Polaris Industries Inc. PII: This Minnesota-based motorcycles and off-road vehicles (ORV) firm delivered an earnings beat in the December-end quarter, chiefly on stellar contribution from the boats and motorcycles segments. The company beat estimates in all of the last four quarters, the average positive surprise being 7.86%.
Polaris Inc. Price and Consensus
Polaris Inc. price-consensus-chart | Polaris Inc. Quote
However, per our model, the company is unlikely to maintain its earnings beat streak in the quarter to be reported, as it currently carries a Zacks Rank of 5 and has an Earnings ESP of -0.29%. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 58 cents per share on revenues of $1.41 billion.
Polaris’ results are expected to reflect year-over-year revenue declines across its segments, including boats and ORV/snowmobiles. The consensus mark for revenues from ORV/snowmobiles and boats is pegged at $866 million and $177 million, calling for a year-over-year decrease of 0.11% and 4.3%, respectively. Notably, the Zacks Consensus Estimate for sales from the motorcycles, aftermarket and global adjacent markets is pegged at $138 million, $229 million and $116 million, depicting a year-over-year increase of 16.9%, 10.5%, respectively.
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Ford Motor Company (F) : Free Stock Analysis Report
Cummins Inc. (CMI) : Free Stock Analysis Report
PACCAR Inc. (PCAR) : Free Stock Analysis Report
O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
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