PACCAR Inc. (PCAR) is set to report fourth-quarter 2014 results on Jan 30. In the last quarter, it had posted a positive earnings surprise of 8.33%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
PACCAR expects Class 8 industry retail sales of 245,000–255,000 vehicles in the U.S. and Canada in 2014, up from 212,000 vehicles in 2013 and the highest since 2006. Moreover, PACCAR expects higher industry demand for heavy-duty trucks in South America, which should translate into higher sales for the company as well.
However, PACCAR is witnessing declining sales in Europe. Industry sales in the above 16-ton truck market in Europe are expected to be in the range of 210,000–220,000 units in 2014, down from 241,000 units in 2013. In addition, PACCAR’s commercial truck markets face tough competition.
Earnings Whispers
Our proven model does not conclusively show that PACCAR 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. PACCAR’s Earnings ESP is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.09.
Zacks Rank: PACCAR carries a Zacks Rank #2 (Buy). Though a Zacks Rank #2 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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:
O'Reilly Automotive Inc. (ORLY) has an Earnings ESP of +2.40% and a Zacks Rank #2. The company will report fourth-quarter 2014 results on Feb 4.
Lear Corp. (LEA) has an Earnings ESP of +1.46% and a Zacks Rank #2. The company’s fourth-quarter financial results are scheduled for release on Jan 30.
AutoNation Inc. (AN) has an Earnings ESP of +1.10% and a Zacks Rank #3 (Hold). It will release its fourth-quarter earnings results on Feb 3.
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