Westport Innovations Inc. WPRT is expected to report first-quarter 2015 results on May 7. In the last quarter, the company had posted a negative earnings surprise of 66.67%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Westport will face challenges due to fluctuations in exchange rates. The company expects revenues for 2015 to be in the range of $110–$125 million; down from $130.6 million recorded in 2014 due to currency fluctuations, volatility in U.S. gasoline prices and continued economic uncertainty in Europe. Thus, the company’s first-quarter earnings may witness a year-over-year decline as well.
However, Westport is likely to benefit from the acquisition of Netherlands-based Prins Autogassystemen Holding B.V. made in Dec 2014. This acquisition will expand the company’s product portfolio, and boost sales volume and strength in Europe, Asia and North America, in addition to helping it enter into new markets.
Further, the company will benefit from its product launches. In Mar 2015, the company introduced new combustion technology in Volvo Car Company's new Drive-E powertrain bi-fuel engine. This will provide customers with better performance along with low emissions.
Earnings Whispers
Our proven model does not conclusively show that Westport 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: Westport’s Earnings ESP is -14.29% as the Most Accurate estimate stands at a loss of 40 cents, while the Zacks Consensus Estimate is pegged at a loss of 35 cents.
Zacks Rank: Westport’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
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
Metaldyne Performance Group Inc. MPG has an Earnings ESP of +5.41% and a Zacks Rank #3. The company’s first-quarter 2015 financial results are scheduled for release on May 7.
SORL Auto Parts, Inc. SORL will release first-quarter 2015 results on May 15. The company carries a Zacks Rank #1 (Strong Buy).
Power Solutions International, Inc. PSIX will post first-quarter 2015 results on May 7, 2015. The company has a Zacks Rank #2 (Buy).
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