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Fiat Chrysler (FCAU) Q2 Earnings: A Surprise in Store?

Zacks Equity Research
Updated

Fiat Chrysler Automobiles N.V. FCAU is set to report second-quarter 2016 results before the opening bell on Jul 27. Last quarter, the company posted a positive earnings surprise of 80.95%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Fiat Chrysler will benefit from rising sales in the U.S. For the first half of 2016, the company’s U.S. sales improved 6% year over year to 1,152,259 units. The company’s June sales were the best sales for the month in 11 years. Additionally, in the first half of the year, sales from Europe rose 16.8% to 551,000 units. This increase in sales volume will have a positive impact on the company’s revenues and earnings.

However, Fiat Chrysler is going through a challenging phase owing to product recalls. Frequent product recalls increase the company’s cost burden and adversely affect results.

Earnings Whispers

Our proven model does not conclusively show that Fiat Chrysler is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Fiat Chrysler’s Earnings ESP is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 41 cents.

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

FIAT CHRYSLER Price and EPS Surprise

FIAT CHRYSLER Price and EPS Surprise | FIAT CHRYSLER Quote

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Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Westport Fuel Systems Inc. WPRT has an Earnings ESP of +9.09% and a Zacks Rank #3 (Hold). The company’s second-quarter 2016 financial results are expected to release on Aug 3.

Allison Transmission Holdings, Inc. ALSN has an Earnings ESP of +6.35% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Jul 27.

Visteon Corporation VC has an Earnings ESP of +2.99% and a Zacks Rank #3. The company’s second-quarter fiscal 2016 financial results are expected to release on Jul 28.

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FIAT CHRYSLER (FCAU): Free Stock Analysis Report
 
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Zacks Investment Research