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Meritor (MTOR) to Report Q4 Earnings: What's in the Cards?

Meritor, Inc.MTOR is expected to report fourth-quarter fiscal 2015 (ended Sep 30, 2015) results on Nov 11. In the last quarter, the company posted a positive earnings surprise of 24.24%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Meritor is poised to benefit from new businesses. In Jul 2015, the company announced the purchase of majority of the assets of Sypris Solutions, Inc.'s manufacturing facility in Morganton, NC. This facility will help expand Meritor's business. In addition, for fiscal 2015, Meritor expects adjusted earnings from continuing operations in the range of $1.40-$1.50 per share, up from $1.30-$1.40 guided earlier and significantly higher than $1.02 recorded in fiscal 2014. The strong fiscal 2015 EPS outlook raise expectations of favorable results in the fourth quarter of fiscal 2015.

However, for fiscal 2015, Meritor anticipates revenues in the band of $3.5-$3.55 billion, down from the fiscal 2014 level of $3.8 billion. The company lowered the revenue guidance in April from $3.7 billion predicted earlier due to foreign exchange headwinds and expectations of lower production in Brazil and China. This will also adversely affect the company's fourth-quarter revenues.

Earnings Whispers

Our proven model does not conclusively show that Meritor 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: Meritor's Earnings ESP is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 29 cents.

Zacks Rank: Meritor carries a Zacks Rank #4 (Sell). 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

Copart, Inc. CPRT will report first-quarter fiscal 2016 (ended Oct 31, 2015) results on Nov 23. The company carries a Zacks Rank #3 (Hold).

AutoZone, Inc. AZO will post first-quarter fiscal 2016 (ending Nov 22, 2015) financial results on Dec 8. The company has a Zacks Rank #3.

CarMax Inc. KMX will release third-quarter fiscal 2016 (ending Nov 30, 2015) results on Dec 18. The company carries a Zacks Rank #3.

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COPART INC (CPRT): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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