Delphi Automotive PLC DLPH is set to report fourth-quarter 2015 results on Feb 4. In the last quarter, the company had delivered in-line earnings.
Delphi Automotive beat earnings estimates in three of the trailing four quarters, resulting in a positive average earnings surprise of 1.80%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Delphi Automotive is one of the largest vehicle parts manufacturers in the world. The company regularly undertakes acquisitions and alliances to enhance its technological capability, increase operating scale, augment its client base and expand geographically. This has a positive influence on revenues and earnings.
For 2015, Delphi Automotive projects adjusted earnings in the range of $5.15–$5.25 per share, significantly higher than $5.09 recorded in 2014.
Revenues are expected in the band of $14.9–$15.1 billion in 2015, down from $15.2–$15.6 billion predicted earlier, and lower than $17.02 billion recorded in 2014. For 2015, adjusted operating income is expected in the range of $1.94–$1.97 billion, lower than the previous estimate of $1.98–$2.03 billion as well as $2.02 billion recorded in 2014.
The sale of the Thermal Systems business and interest in SDAAC will have a negative impact on Delphi Automotive’s revenues. Moreover, economic weakness in South America is leading to lower production in the region by original equipment manufacturers. This can adversely affect Delphi Automotive’s sales.
Earnings Whispers
Our proven model does not conclusively show that Delphi Automotive 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: Earnings ESP for Delphi Automotive is +0.73% because the Most Accurate estimate of $1.38 stands above the Zacks Consensus Estimate of $1.37.
Zacks Rank: Delphi Automotive 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.
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:
Magna International Inc. MGA has an Earnings ESP of +0.89% and a Zacks Rank #3 (Hold). The company is expected to report fourth-quarter and full-year 2015 results on Feb 26.
Tenneco Inc. TEN has an Earnings ESP of +4.39% and a Zacks Rank #3. The company is expected to release fourth-quarter and full-year 2015 earnings results on Feb 9.
BorgWarner Inc. BWA has an Earnings ESP of +2.78% and a Zacks Rank #3. The company is expected to report fourth-quarter and full-year 2015 results on Feb 11.
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