Can PACCAR (PCAR) Spring a Surprise this Earnings Season?
PACCAR Inc . PCAR is set to report first-quarter 2016 results before the market opens on Apr 25. In the last quarter, the company posted a negative earnings surprise of 5.75%. Let's see how things are shaping up for this announcement.
Factors Influencing this Quarter
PACCAR benefits from a sizeable market share in the U.S. and Canada. Moreover, the company undertakes active capital deployment.
PACCAR is well positioned in the key markets due to its strategic investments. The company has invested $6 billion in capital projects for launching innovative products and new technologies in the past decade. For 2017, the company targets capital investments in the range of $375-$425 million and research and development expenses of $250-$280 million.
The company continues to expand its global network of strategically located parts distribution centers (PDC). PACCAR is optimistic about its expansion plans in South America and Russia. The DAF factory in Ponta Grossa and the establishment of a subsidiary named DAF Trucks in Russia are expected to boost earnings. Further, it is expanding the 35-year old truck factory in Denton, TX, and adding a new automated storage system for painted components. This will increase both productivity and capacity at the plant.
However, PACCAR may be affected by the expected decline in Class 8 industry retail sales in the U.S. and Canada, as well as in above 16-ton truck sales in Europe. Moreover, it faces stiff competition in the commercial trucks market.
Our proven model does not conclusively show that PACCAR 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP : The Earnings ESP for PACCAR is 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 88 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
PACCAR Inc. Price and EPS Surprise
Zacks Rank : PACCAR currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
PACCAR's shares rallied 17% in the last six months; outperforming the Zacks categorized Auto Manufacturers-Domestic industry's 12% increase.
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 Company CTB has an Earnings ESP of +14.49% and a Zacks Rank #3. The company is slated to report first-quarter 2017 results on Apr 27. You can see the complete list of today's Zacks #1 Rank stocks here.
CNH Industrial N.V. CNHI has an earnings surprise of +33.33% and carries a Zacks Rank #2. The company's first-quarter 2017 financial results are expected to release on Apr 27.
General Motors Company GM has an earnings surprise of +4.86% and carries a Zacks Rank #3. The company's first-quarter 2017 financial results are scheduled to release on Apr 28.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.