The second-quarter 2017 earnings season for the auto sector is knocking on the door. Two important companies expected to come up with their results on Jul 20 are Genuine Parts Company GPC and WABCO Holdings Inc. WBC.
Per the latest Earnings Outlook, as of Jul 12, 25 companies from the S&P 500 category have already announced their results. These companies, as a whole, recorded earnings and revenues beat ratios of 84% and 88%, respectively. As of that date, no companies from the auto sector have reported second-quarter 2017 results.
However, second-quarter 2017 earnings and revenue growth for auto companies are expected to be in the negative territory. Auto stocks are expected to register 10.2% and 0.7% year-over-year decline in earnings and revenues, respectively. However, the S&P 500 companies, as a whole, are anticipated to record 5.6% and 4.5% year-over-year growth in earnings and revenues, respectively, during the quarter.
In fact, the auto sector is facing a lot of challenges. The joy-ride of 2016 (record year for new vehicle sales in the U.S.) is not likely to continue in 2017, as the industry is facing the problems of high level of inventory.
Auto major General Motors Company GM lowered the outlook for new vehicle sales in the U.S. in 2017. This is an indication of the industry heading for a moderate downturn in 2017. A glut in nearly-new used vehicles is expected to undermine sales this year. This has already started affecting the top line of many automakers.
Also, safety recalls and related cost have become an alarming issue for majority of manufacturers in recent times. This has adversely affected many automakers including Honda Motor Co., Ltd. HMC and Toyota Motor Corporation TM.
That said, let’s take a look at the two auto companies scheduled to announce their results tomorrow.
We relied on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.
Atlanta, GA-based Genuine Parts is engaged in distributing automotive and industrial replacement parts, office products and electrical/electronic materials in the U.S., Canada and Mexico. Our model does not conclusively predict that the company is likely to deliver a positive surprise as it has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read more: Genuine Parts to Report Q2 Earnings: What's in Store?).
Brussels, Belgium-based WABCO Holdings is engaged in providing electronic braking, stability, suspension and transmission control systems for heavy duty commercial vehicles. Currently, the company has an Earnings ESP of 0.00% and a Zacks Rank #3. We cannot conclusively predict a positive earnings surprise this quarter.
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General Motors Company (GM): Free Stock Analysis Report
Honda Motor Company, Ltd. (HMC): Free Stock Analysis Report
Toyota Motor Corp Ltd Ord (TM): Free Stock Analysis Report
Wabco Holdings Inc. (WBC): Free Stock Analysis Report
Genuine Parts Company (GPC): Free Stock Analysis Report
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