Westport Innovations Inc. WPRT is expected to report third-quarter 2015 results on Nov 10. In the last quarter, the company posted a negative earnings surprise of 3.85%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Westport Innovations regularly launches new products to boost sales. During the third quarter, the company introduced the 2016 ISB6.7 G, a 6.7-liter MidRange natural gas engine in the Type C School bus market as well as the Westport High Pressure Direct Injection system for a Daimler heavy-duty engine, in collaboration with Daimler AG DDAIF.
The company also has strategic relationships with three of the world's top four engine producers. Moreover, Westport Innovations regularly makes investments and acquisitions related to technologies and businesses that complement or help in the commercialization of its products.
However, Westport Innovations has been incurring losses over the past several years, while its cash position is weakening. The company has also witnessed a declining revenue trend in the recent past, and revenues are projected to decrease in 2015, thereby leading to expectations of a drop in the third quarter as well.
Earnings Whispers
Our proven model does not conclusively show that Westport Innovations is likely to beat estimates 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: Westport Innovations’ Earnings ESP is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at a loss of 25 cents.
Zacks Rank: Westport Innovations carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
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.
Stocks to Consider
CarMax Inc. KMX has an Earnings ESP of +1.45% and a Zacks Rank #3 (Hold). The company will report third-quarter 2015 financial numbers on Dec 18.
Fuji Heavy Industries Ltd. FUJHY sports a Zacks Rank #1 (Strong Buy). The company’s third-quarter 2015 financial results are scheduled for release on Nov 6.
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