Fiat Chrysler Automobiles N.V.FCAU is set to report first-quarter 2018 results before the opening bell on Apr 26. Last quarter, it reported an earnings surprise of 28.1%. The company surpassed estimates in all the trailing four quarters with an average positive earnings surprise of 24.7%.
Fiat Chrysler's shares have lost 1.5% in the last three months, outperforming the 7% decline of the industry it belongs to.
Let's see how things are shaping up for this announcement.
Fiat Chrysler Automobiles N.V. Price and EPS Surprise
Factors to Consider
The company is set to benefit from rising demand for trucks and utility vehicles. This has encouraged it to come up with new launches. In January, Fiat Chrysler unveiled its 2019 model year Ram 1500, the flagship edition of its Ram brand. Such newly-introduced vehicles will expand its product line and enable Fiat Chrysler to fortify footprint among customers.
In February, the company announced that it will discontinue manufacturing diesel-enabled passenger vehicles by 2022. A decline in demand and rising costs are the two primary reasons behind the decision taken by Fiat Chrysler.
Fiat Chrysler reported 13.6% growth in year-over-year sales to 216,063 vehicles in the United States in March. Its soaring 44.7% SUV Jeep brand sales pushed the metric impressively up. In Europe, the company reported a sales decline of 8% as the Fiat brand slumped 12%, per Reuters. However, the SUV Jeep brand sales recorded rise of roughly 42% to more than 16,600 vehicles.
Further, the company is cutting down its US fleet sales to rental companies in order to focus more on retail sales, which is a more profitable business. This will lead to higher profit margins for the company. In 2017, Fiat Chrysler witnessed a rise in profit and improved debt position compared with prior year's figures.
However, frequent vehicle recalls are hampering the company's name as a brand while also hurting its profit margins. The recent recall was in February 2018, under which Fiat Chrysler recalled more than 228,000 pickup trucks to repair a gearbox defect.
Our proven model does not conclusively show that Fiat Chrysler is likely to beat earnings this quarter. This is because, a stock needs to have both a positive Earnings ESP and a favorable 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.
Zacks ESP : Fiat Chrysler has an Earnings ESP of -12.00% as the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 55 cents and 63 cents, respectively. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank : The company sports a Zacks Rank of 1. However, this combined with its Earnings ESP makes the surprise prediction difficult. Note that we caution against Rank #4 (Sell) and 5 (Strong Sell) stocks going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering from the same space, with the right combination of elements to outpace earnings estimates this time around:
Tenneco Inc. TEN has an Earnings ESP of +0.90% and a Zacks Rank of 3. The company is expected to report first-quarter 2018 results on Apr 27. You can see the complete list of today's Zacks #1 Rank stocks here .
Meritor, Inc. MTOR has an Earnings ESP of +3.42% and is a #3 Ranked player. Its first-quarter 2018 results are slated to be announced on May 3.
American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +3.45% and a Zacks Rank of 3. The company will report its first-quarter 2018 results on May 4.
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