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4 Auto Stocks Likely to Override Earnings Estimates in Q1

Zacks Equity Research

Throughout the first quarter of 2019, auto sales took a hit with consumers abandoning passenger cars in favor of the larger, more comfortable pickup trucks and SUVs. Further, soaring vehicle prices along with unfavorable interest rates prompted consumers to refrain from buying new vehicles. This eventually resulted in a sales slump.

Auto Sales

Among the leading auto manufacturers, Detroit-based General Motors Company’s GM first-quarter 2019 vehicle sales declined 7% from the prior-year quarter. Consistent sturdy demand for trucks and SUVs partly compensated the sales decline for new cars. Ford Motor Company F sales declined 2% on a year-over-year basis.

What Lies Ahead

In a bid to win a solid market share and capitalize on robust truck demand, auto giants are flooding the market with redesigned and efficient versions of pickup trucks. This changing vehicle-buying trend has compelled automakers to halt manufacturing of loss-making models and focus on the profitable SUVs, crossovers and trucks.

However, rising interest rates and vehicle price hikes are expected to play a major role in influencing buyers’ choice. Further, the expiration of leases which are nearing maturity may have adverse impact in the first-quarter results.

The Zacks Methodology

There are a few auto stocks that are likely to deliver positive earnings surprise in the first quarter.

The Zacks methodology helps to find stocks with better prospects by combining a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) with a positive Earnings ESP.

Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Research shows that for stocks, with the combination of a favorable Zacks Rank and Earnings ESP, chances of a positive earnings surprise are as high as 70%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

4 Auto Picks

Here are four auto stocks that have the right combination of elements to deliver an earnings beat this quarter.

Meritor, Inc. MTOR has an Earnings ESP of +8.88% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Troy, MI, the company is a global automotive parts manufacturer and supplier. It is expected to release financial results for second-quarter 2019 on May 1.

Meritor, Inc. Price and EPS Surprise

Meritor, Inc. Price and EPS Surprise | Meritor, Inc. Quote

Cummins Inc. CMI has an Earnings ESP of +2.02% and a Zacks Rank #3 at present.

Headquartered in Columbus, IN, the company is a leading global designer, manufacturer and distributor of diesel and natural gas engines, electric power generation systems, and engine-related components, fuel systems, controls and air handling systems. The company’s financial results for first-quarter 2019 are slated to release on Apr 30.

Cummins Inc. Price and EPS Surprise

Cummins Inc. Price and EPS Surprise | Cummins Inc. Quote

Oshkosh Corporation OSK has an Earnings ESP of +11.32% and a Zacks Rank of 3 at present.

Oshkosh, WI-based company is a designer, manufacturer and seller of a varied range of vehicle bodies and specialty vehicles. It is slated to release financial results for first-quarter 2019 on Apr 30.

Oshkosh Corporation Price and EPS Surprise

Oshkosh Corporation Price and EPS Surprise | Oshkosh Corporation Quote

Navistar International Corporation NAV has an Earnings ESP of +12.65% and a Zacks Rank of 3 at present.

Based in Illinois, the company manufactures International brand commercial and military trucks, proprietary diesel engines, and IC Bus branded school and commercial buses. It is expected to release financial results for second-quarter 2019 on Jun 4.

Navistar International Corporation Price and EPS Surprise

Navistar International Corporation Price and EPS Surprise | Navistar International Corporation Quote

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Ford Motor Company (F) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Meritor, Inc. (MTOR) : Free Stock Analysis Report
 
Navistar International Corporation (NAV) : Free Stock Analysis Report
 
Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
Cummins Inc. (CMI) : Free Stock Analysis Report
 
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