Will Delphi Automotive's (DLPH) Earnings Surprise in Q3?
Delphi Automotive PLC DLPH is set to report third-quarter 2015 results on Oct 29. In the last quarter, the company had delivered a positive earnings surprise of 0.75%.
Delphi Automotive beat earnings estimates in each of the trailing four quarters, resulting in a positive average earnings surprise of 2.46%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Delphi Automotive regularly undertakes acquisitions and alliances to enhance its technological capability, increase operating scale, augment its client base and expand geographically. This has a positive influence on revenues. For 2015, Delphi Automotive projects adjusted earnings in the range of $5.30–$5.40 per share, significantly higher than $5.09 recorded in 2014. This raises expectations of better performance in the third quarter.
However, the sale of the Thermal Systems business and interest in SDAAC will have a negative impact on Delphi Automotive’s third-quarter revenues. Moreover, economic weakness in South America is leading to production cuts by original equipment manufacturers. This in turn is adversely affecting Delphi Automotive’s sales.
Earnings Whispers
Our proven model does not conclusively show that Delphi Automotive 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: Earnings ESP for Delphi Automotive is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.28.
Zacks Rank: Delphi Automotive carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 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:
Cooper Tire & Rubber Co. CTB has an Earnings ESP of +5.26% and a Zacks Rank #2 (Buy). The company’s third-quarter 2015 financial results are scheduled for release on Nov 2.
American Axle & Manufacturing Holdings Inc. AXL has an Earnings ESP of +1.49% and a Zacks Rank #3. The company is expected to release third-quarter 2015 earnings results on Oct 30.
Magna International Inc. MGA has an Earnings ESP of +1.82% and a Zacks Rank #3. The company is expected to report third-quarter 2015 results on Nov 5.
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AMER AXLE & MFG (AXL): Free Stock Analysis Report
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DELPHI AUTO PLC (DLPH): Free Stock Analysis Report
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