The auto sector has been one of the worst performers this earnings season. Nearly 90% of the sector’s companies had posted results as of Nov 1, 2016. These companies recorded a year-over-year decline of 9.5% in earnings and 1.6% in revenues, per our Earnings Outlook report. In comparison, total S&P 500 companies that had reported till then posted a 1.9% increase in earnings and a 1.3% rise in revenues.
The overall projections for the auto sector’s Q3 earnings remain weak. By the end of the earnings season, auto sector earnings and revenues are expected to be down 8.8% and 4.7%, respectively. This will place it among the worst performers in the 16 Zacks sectors. In comparison, total S&P 500 earnings are projected to improve 2.0%, with revenues also rising 1.4% year over year.
The decline in U.S. auto sales in August and September has been hurting many automakers. The pressure to maintain attractive incentives and deals may also strain their margins. Further, expenses related to safety recalls as well as the adverse impact of foreign currency translation remain headwinds for the sector. However, there are a few positives as well. Strong sales growth in China and Europe is the primary driving factor for the auto sector in Q3. Moreover, low fuel prices are driving the sales of higher margin vehicle segments, such as SUVs and light trucks.
With all these factors in mind, let’s see what awaits these three auto stocks that are slated to release third-quarter 2016 results on Nov 3.
Magna International Inc. MGA has an Earnings ESP of +2.50% because the Most Accurate estimate is at $1.23, while the Zacks Consensus Estimate is pegged at $1.20. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Magna International managed to beat earnings in the last four quarters, delivering a positive average surprise of 4.18%. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MAGNA INTL CL A Price and EPS Surprise
MAGNA INTL CL A Price and EPS Surprise | MAGNA INTL CL A Quote
Metaldyne Performance Group Inc. MPG currently has an Earnings ESP of +6.25% because the Most Accurate estimate stands at 34 cents, while the Zacks Consensus Estimate is pegged at 32 cents. We note that Metaldyne Performance delivered positive earnings surprises in two of the trailing four quarters and negative surprises in the other two. This resulted in an average negative surprise of 0.88%. The company holds a Zacks Rank #4 (Sell).
METALDYNE PERFM Price and EPS Surprise
METALDYNE PERFM Price and EPS Surprise | METALDYNE PERFM Quote
SPX Corporation SPXC has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 22 cents. The company posted negative earnings surprises in each of the trailing four quarters, with an average negative surprise of 261.28%. SPX currently carries a Zacks Rank #3 (Hold).
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