U.S. markets open in 4 hours 12 minutes
  • S&P Futures

    4,209.00
    -4.75 (-0.11%)
     
  • Dow Futures

    33,739.00
    -22.00 (-0.07%)
     
  • Nasdaq Futures

    14,095.50
    -34.50 (-0.24%)
     
  • Russell 2000 Futures

    2,273.00
    -7.90 (-0.35%)
     
  • Crude Oil

    73.11
    -0.55 (-0.75%)
     
  • Gold

    1,778.30
    -4.60 (-0.26%)
     
  • Silver

    25.92
    -0.11 (-0.42%)
     
  • EUR/USD

    1.1902
    -0.0023 (-0.19%)
     
  • 10-Yr Bond

    1.4840
    0.0000 (0.00%)
     
  • Vix

    18.21
    -2.49 (-12.03%)
     
  • GBP/USD

    1.3870
    -0.0063 (-0.45%)
     
  • USD/JPY

    110.4700
    +0.1720 (+0.16%)
     
  • BTC-USD

    31,557.88
    -1,817.91 (-5.45%)
     
  • CMC Crypto 200

    754.13
    -96.22 (-11.32%)
     
  • FTSE 100

    7,081.38
    +19.09 (+0.27%)
     
  • Nikkei 225

    28,884.13
    +873.20 (+3.12%)
     

Auto Stocks' Earnings Lined Up for Aug 4: NKLA, IAA & More

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·8 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

A host of companies belonging to the Auto-Tires-Trucks sector are slated to release their quarterly numbers this week. As of the latest Earnings Trend Report dated Jul 29, 42.9% of the firms in the Auto-Tires-Trucks sector have reported earnings figures.

In the last reported quarter, the auto sector’s earnings plummeted 77.5% year over year on an 11.6% revenue decline. In the second quarter, overall earnings and revenues for the sector are projected to be down a whopping 124.8% and 47%, year over year, per the latest Earnings Preview.

Let’s take a look at the factors that are likely to have impacted auto stocks during the to-be-reported quarter.

Key Factors

Automakers around the globe are likely to have struggled with declining car sales amid the economic-slowdown concerns due to the coronavirus pandemic. Notably, vehicle sales from each of the Detroit 3 carmakers — Ford, General Motors and Fiat Chrysler — dropped year over year during the June-end quarter.

The pandemic has crippled the auto industry, thanks to the closure of factories, dwindling footfall at dealerships and disruptions in the global supply chains. Amid the pandemic-related uncertainties, several auto firms have withdrawn their annual guidance and are resorting to cost-containment measures in a bid to preserve the financial flexibility. Dividend cuts, buyback suspensions, employee layoffs, pay cuts and hiring freezes have become commonplace during this crisis.

The virus outbreak has given rise to unprecedented challenges for the auto sector, having created a demand shock as consumers’ confidence has dropped significantly. The coronavirus crisis is expected to have eroded automakers’ earnings and sales during the quarter under review.

Key Releases on Aug 4

Let’s take a glance at how these four auto players are placed ahead of their quarterly results, slated for an Aug 4 release.

Nikola Corporation NKLA: This will be the first time that the electric-truck start-up will report quarterly numbers as a public company.

Nikola Corporation Price and Consensus

Nikola Corporation Price and Consensus
Nikola Corporation Price and Consensus

Nikola Corporation price-consensus-chart | Nikola Corporation Quote

Our proven model suggests that the combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Things are looking up for Nikola as it currently carries a Zacks Rank of 3 and has an Earnings ESP of +3.70%. The Zacks Consensus Estimate for the quarter’s loss has been unchanged at 14 cents per share over the past 30 days. The consensus mark for Nikola’s second-quarter revenues is pegged at $60,000.

The company is betting big on electric trucks, which is likely to have aided its quarterly performance. The upcoming Nikola Badger pick-up truck will be available in BEV (battery-electric vehicle) with a range of up to 300 miles and FCET (fuel-cell electric vehicle) with a 500-750 mile range. It should be noted that Nikola generated more than $10 billion in pre-order revenues. The company’s partnership with CNH Industrial (CNHI) is expected to have beneficial. Joining forces with CNH Industrial has enabled Nikola to deepen its penetration into high-potential European markets and de-risk manufacturing execution.

While a lot has been working in favor of the company, soaring technology costs to develop such advanced vehicles are likely to have dented margins. Also, it might have faced intense competition from other auto biggies.

Lear Corporation LEA: Lear Corporation posted higher-than-anticipated results in the last reported quarter on better-than-expected adjusted earnings in its Seating segment. Over the preceding four quarters, Lear Corporation beat estimates on three occasions and missed in the other, the average surprise being 29.87%.

Lear Corporation Price and Consensus

Lear Corporation Price and Consensus
Lear Corporation Price and Consensus

Lear Corporation price-consensus-chart | Lear Corporation Quote

Lear Corporation has an Earnings ESP of -0.85% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for the quarter’s loss is pegged at $4.98 a share on revenues of $2.14 billion.

Lear Corporation is expected to have registered a decline in sales volumes amid industry headwinds during the April-June quarter. The company withdrew the current-year guidance and suspended the existing share-repurchase program in response to disruptions to its supply chain due to the coronavirus mayhem.

Notably, the Zacks Consensus Estimate for Seating and E-systems segmental net sales is pegged at $1,325 and $399 million, calling for a slump of 65.5% and 65.8%, year on year. However, Lear Corporation's cost-cutting efforts are anticipated to have aided its margins to some extent during the quarter under review. While elevated spending on advanced engineering might have hurt the company’s quarterly performance, solid cost-containment efforts are anticipated to have offered some respite.

Allison Transmission Holdings, Inc. ALSN: Allison posted dismal year-over-year results in the last reported quarter, primarily on lower gross profit and elevated product-initiative spending. The company beat estimates in each of the preceding four quarters, the average surprise being 19.06%.

Allison Transmission Holdings, Inc. Price and Consensus

Allison Transmission Holdings, Inc. Price and Consensus
Allison Transmission Holdings, Inc. Price and Consensus

Allison Transmission Holdings, Inc. price-consensus-chart | Allison Transmission Holdings, Inc. Quote

Allison currently carries a Zacks Rank #3 and has an Earnings ESP of +25%. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 19 cents per share on revenues of $410.26 million.

Allison’s strategic buyouts are expected to have aided its second-quarter performance. The buyout of Vantage Power and AxleTech’s electric vehicle systems division is anticipated to have supported Allison’s electrification strategy during the soon-to-be-reported quarter, expanding its system and integration level capabilities in alternative propulsion. The company’s cost-containment efforts, including slashing the capex by 35% year over year amid the pandemic-induced uncertain economic environment, is likely to have offered respite to some extent. Notably, the Zacks Consensus Estimate for sales from the Defense segment is pegged at $43.70 million, suggesting a year-over-year rise of 18.1%, respectively.

IAA, Inc. IAA: This provider of salvage vehicle auctions and related services reported dismal results in the last reported quarter on higher year-over-year selling, general and administrative expenses and lower net income. IAA beat estimates in all of the last four quarters, the average surprise being 9.93%.

IAA, Inc. Price and Consensus

IAA, Inc. Price and Consensus
IAA, Inc. Price and Consensus

IAA, Inc. price-consensus-chart | IAA, Inc. Quote

IAA currently carries a Zacks Rank #3 and has an Earnings ESP of -25.68%. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 15 cents per share on revenues of $253.46 million.

IAA is expected to have witnessed a decline in sales volumes amid industry headwinds during the June-end quarter. The company withdrew the ongoing-year guidance in response to disruptions to its supply chain due to the coronavirus mayhem. However, IAA's cost-cutting efforts are anticipated to have aided its margins to some extent during the period in discussion. While rising elevated SG&A costs might have hurt the company’s quarterly performance, solid cost-containment efforts and product launches are likely to have offered some respite.

LCI Industries LCII: The company reported weaker-than-anticipated results in the last reported quarter on higher selling, general and administrative expenses and lower net income. LCI beat estimates on three occasions and missed in the other — the average negative surprise being 0.67%.

LCI Industries Price and Consensus

LCI Industries Price and Consensus
LCI Industries Price and Consensus

LCI Industries price-consensus-chart | LCI Industries Quote

LCI currently carries a Zacks Rank of 2 and has an Earnings ESP of 0.00%. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 14 cents per share on revenues of $518.56 million.

The company’s acquisition of Polyplastic Group is expected to have bolstered its second-quarter performance. Increased demand for Recreational Vehicles (RVs) is likely to have driven outdoor recreational products sales during the quarter to be reported. Its focus on navigating the current environment, advancement of diversification strategy, integrating the latest acquisitions, and maintaining investment in Research & Development is also expected to have driven the company’s performance during the April-June period. Remarkably, LCI’s quarterly net sales are estimated in the range of $515 million to $530 million.

Nonetheless, heightening coronavirus fears are likely to have thwarted demand for highly engineered components for the leading original equipment manufacturers (OEMs) in the recreation and transportation product markets during this period. Lower vehicle sales amid a weakening consumer demand and soft economic conditions might have depressed the company’s top line during the quarter in discussion.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
 
Lear Corporation (LEA) : Free Stock Analysis Report
 
LCI Industries (LCII) : Free Stock Analysis Report
 
IAA, Inc. (IAA) : Free Stock Analysis Report
 
Nikola Corporation (NKLA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research