LKQ To Report Q1 Earnings: What's In Store For The Stock?

LKQ Corporation LKQ is set to report first-quarter 2018 results before the opening bell on Apr 26.

Last quarter, the company delivered a negative surprise of 2.4%. Per the earnings record, the company missed estimates in only one of the trailing four quarters while beating earnings on other three occasions. The average earnings surprise was 3.3%.

In the last six months, shares of LKQ Corp have outperformed the industry it belongs to. The stock has gained 4.9% compared with the industry’s 2.4% rise.

Let’s see, how things have shaped up for the upcoming announcement.

LKQ Corporation Price and EPS Surprise

LKQ Corporation Price and EPS Surprise | LKQ Corporation Quote

Factors Influencing This Quarter

LKQ Corp focuses on growing footprint through organic expansion and acquisitions. In full-year 2017, the company completed total 26 acquisitions. Further, its acquisition revenues witnessed growth of 9.1% in 2017. For 2018, It expects organic revenue growth for parts & services to be 4-6% in comparison with 4.1% recorded in 2017. Benefits of organic expansion and acquisitions are likely to positively impact first-quarter 2018 results.

The company is also witnessing continuous rise in Selling, General and Administrative expenses (SG&A), which includes fluctuating prices of fuel, scrap metal and other commodities.

Earnings Whispers

Our proven model does not conclusively show that LKQ Corp is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: LKQ Corp has an Earnings ESP of -2.06% as the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 58 cents and 59 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: LKQ Corp sports a Zacks Rank of 3, which increases the predictive power of ESP. However, a company needs a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering from the same space, with the right combination of elements to outpace earnings estimates this time around:

BorgWarner Inc. BWA has an Earnings ESP of +0.83% and a Zacks Rank #2. Its first-quarter 2018 results are expected to be released on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +3.45% and a Zacks Rank of 3. It is expected to report first-quarter 2018 results on May 4.

Cummins Inc. CMI has an Earnings ESP of +0.44% and is a #2 Ranked player. Its first-quarter 2018 results are slated to be announced on May 1.

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