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Lithium Americas (LAC) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

Lithium Americas Corp. LAC is expected to release first-quarter 2019 results on May 13.

The stock has lost 28.3% in the past year compared with the industry’s 28.9% decline.

Some Factors at Play

In April, Lithium Americas provided an update on the Cauchari-Olaroz lithium brine project in Argentina. It remains focused on advancing the project to production.

The company announced that two evaporation ponds were completed and the construction of additional four ponds is underway. Moreover, the filling of the first pond with brine started in October 2018. Per the company, seven wells are presently pumping brine to the ponds and construction of three additional wells is underway.

The company and its joint venture partner Ganfeng are working with Minera Exar for optimizing the project. This will enable the production of highest quality battery grade lithium carbonate for the lowest cost. Minera Exar has increased its team size, which will support operations and construction activities.

Notably, the company has advanced $34 million to Minera Exar in 2018 in the form of equity contributions and loans for the construction. An additional $37.5-million was advanced by the company to Minera Exar subsequent to the year ended Dec 31, 2018.

What the Zacks Model Says

Our proven model does not show that Lithium Americas is likely to beat estimates in the to-be-reported quarter. This is because a stock needs to have a positive Earnings ESP and a 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:

Earnings ESP: Lithium Americas has an Earnings ESP of 0.00%. The Most Accurate Estimate and the Zacks Consensus Estimate are both currently pegged at a loss of 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Lithium Americas currently carries a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies worth considering per our model, which have the right mix of elements to beat estimates.

Dollar General Corporation DG has an Earnings ESP of +1.51% and carries a Zacks Rank #3.

Best Buy Co., Inc BBY has an Earnings ESP of +0.31% and carries a Zacks Rank #3.

Dillard's, Inc. DDS has an Earnings ESP of +3.95% and a Zacks Rank #3.

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