General Motors Co. GM is set to report first-quarter 2015 results on Apr 23. In the last quarter, the company had posted a positive earnings surprise of 40.00%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that General Motors is likely to beat earnings this season because it has the right combination of the two key components.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +4.17%. This is because the Most Accurate estimate stands at $1.00, whereas the Zacks Consensus Estimate is pegged at 96 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: General Motors currently sports a Zacks Rank #1 (Strong Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
General Motors’ Zacks Rank #1 and positive ESP make us reasonably confident of a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
General Motors expects to record better truck sales in 2015, driven by rising industry demand along with the launch of new full-size pickups and large SUVs including the Chevrolet Colorado and Trax. Declining fuel prices will further boost the company’s sales. Thus, we can expect improved sales figures for the first quarter of 2015, which in turn, should boost earnings.
General Motors is focusing on the emerging markets, particularly Brazil, China and India, to enhance its global sales by increasing capacity investment to meet the growing demand. The company is focused on the Chinese market, which is expected to become the world’s largest luxury vehicle market, later this decade. All these factors should drive the first-quarter results of the company.
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:
Allison Transmission Holdings, Inc. ALSN has an Earnings ESP of +4.62% and a Zacks Rank #1. The company will report first-quarter 2015 earnings on Apr 27.
AutoNation Inc. AN has an Earnings ESP of +4.60% and a Zacks Rank #2 (Buy). The company will report its first-quarter 2015 results on Apr 22.
American Axle & Manufacturing Holdings Inc. AXL has an Earnings ESP of +7.02% and a Zacks Rank #3 (Hold). The company’s first-quarter financial results are scheduled for release on May 1.
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