Fiat Chrysler Automobiles N.V. FCAU is set to report first-quarter 2015 results on Apr 29. Last quarter, the company had posted a positive earnings surprise of 14.71%. Let us see how things are shaping up for this announcement.
Factors Influencing This Quarter
Fiat Chrysler will benefit from rising sales in the U.S. Its March sales this year was the group’s best March sales since 2007. With this the company recorded increase in sales for 60 consecutive months. Fiat Chrysler also recorded higher-than-industry average sales in Europe from January to March. The increase in sales volume will have a positive impact on earnings.
However, Fiat Chrysler is going through a challenging period due to product recalls and warranty obligations. Product recalls increase the company’s cost burden and also harm its reputation. Issues of product safety and reliability are called to the fore. In addition, the automotive industry is highly competitive and cyclical.
Earnings Whispers
Our proven model does not conclusively show that Fiat Chrysler 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. Fiat Chrysler’s Earnings ESP is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both currently stand at 6 cents.
Zacks Rank: Fiat Chrysler carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 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:
Gentherm Inc. THRM has an Earnings ESP of +2.00% and a Zacks Rank #1 (Strong Buy). The company will report first-quarter 2015 earnings on Apr 30.
American Axle & Manufacturing Holdings Inc. AXL has an Earnings ESP of +3.45% and a Zacks Rank #3 (Hold). The company’s first-quarter financial results are scheduled for release on May 1.
Cooper Tire & Rubber Co. CTB has an Earnings ESP of +1.37% and a Zacks Rank #3 (Hold). The company’s first-quarter financial results are scheduled for release on May 1.
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