Penske Automotive Group, Inc. PAG is set to report first-quarter 2016 results on Apr 26. In the last quarter, the company posted breakeven results. Let us see how things are shaping up for this announcement.
Factors Influencing this Quarter
Penske Automotive aims to boost earnings by expanding its dealership network. In Jan 2016, Penske Automotive announced that it has acquired a 49% equity ownership interest in the Nicole Group, a luxury dealership group that operates in Kanagawa and Tokyo, Japan. With this stake buy, Penske Automotive has entered the Japanese market with a strong and established local partner. The company expects to benefit from the strength of the luxury dealership group’s existing business in addition to expanding further through growth and acquisitions. Penske Automotive has also been benefiting from rising new vehicle sales over the past few years.
However, Penske Automotive is facing challenges such as extensive merchandise inventory and intensifying competition in the industry. In addition, the company’s business is exposed to fluctuations in foreign exchange rates. All these factors can adversely affect its quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Penske 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: Penske Automotive has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 87 cents.
Zacks Rank: Penske 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:
Ford Motor Co. F has an Earnings ESP of +4.55% and a Zacks Rank #3. The company is expected to report first-quarter 2016 results on Apr 28.
Autoliv, Inc. ALV has an Earnings ESP of +1.32% and a Zacks Rank #3. The company’s first-quarter 2016 financial results are scheduled for release on Apr 29.
Ferrari N.V. RACE has an Earnings ESP of +12.5% and a Zacks Rank #3. The company will report first-quarter 2016 financial numbers on May 2.
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PENSKE AUTO GRP (PAG): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
AUTOLIV INC (ALV): Free Stock Analysis Report
FERRARI NV (RACE): Free Stock Analysis Report
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