Toyota Motor Corporation TM is set to report first-quarter fiscal 2016 results on Aug 4. In the last quarter, it had posted a negative earnings surprise of 8.11%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Toyota is poised to benefit from its operations in emerging markets like Asia. With different product introductions, the company is expanding its global sales.
The company recorded an increase in earnings, operating income and revenues in fiscal 2015. Also, it provided a favorable outlook for these financial metrics for the fiscal 2016. This raises expectations of year-over-year increases in these metrics for the first quarter of fiscal 2016.
However, the past string of recalls has dented Toyota’s reputation, resulting in lower vehicle resale value. The automaker’s recalls in 2012 and 2013 were the largest number of vehicles recalled by any automaker in these years. The company is now under pressure because of the recall related to the faulty Takata airbag. All this will adversely affect the results of the company.
Earnings Whispers
Our proven model does not conclusively show that Toyota 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 for Toyota is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $2.94.
Zacks Rank: Toyota sports a Zacks Rank #1 (Strong Buy). Though a Zacks Rank #1 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
Metaldyne Performance Group Inc. MPG will post second-quarter 2015 results on Aug 4. The company carries a Zacks Rank #2 (Buy).
Tesla Motors, Inc. TSLA will report second-quarter 2015 results on Aug 5. The company carries a Zacks Rank #2.
Douglas Dynamics, Inc. PLOW will release second-quarter 2015 results on Aug 3. The company carries a Zacks Rank #1.
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