Will Toyota (TM) Surprise Investors with Q4 Earnings? - Analyst Blog

Toyota Motor CorporationTM is set to report fourth-quarter fiscal 2015 (ended Mar 31, 2015) results on May 8. In the last quarter, it had posted a negative earnings surprise of 0.32%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Toyota sold 2.52 million vehicles globally during the quarter ended Mar 2015, down 2% year over year due to weak sales in Japan. While lower sales volume will have a negative impact on the company's revenues in the fourth quarter, Toyota will benefit from favorable foreign currency fluctuations.

The company recorded an increase in earnings, operating income and revenues in the first nine months of fiscal 2015. Also, it provided a favorable outlook for these financial metrics for the fiscal. This raises expectations of strong year-over-year increase in these metrics for the fourth quarter of fiscal 2015.

In terms of negatives, Toyota's operating net cash flow decreased in the first nine months of fiscal 2015 and may continue to decline in the fourth quarter as well.

Earnings Whispers

Our proven model does not conclusively show that Toyota 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: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Toyota's Earnings ESP is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $2.59.

ZacksRank: Toyota carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Metaldyne Performance Group Inc. MPG , with an Earnings ESP of +5.41% and a Zacks Rank #3, is a stock in the auto sector that is expected to beat earnings this season. The company will report first-quarter 2015 earnings on May 7.

SORL Auto Parts, Inc. SORL will release first-quarter 2015 results on May 15. The company sports a Zacks Rank #1 (Strong Buy).

Power Solutions International, Inc. PSIX will post first-quarter 2015 results on May 7. The company carries a Zacks Rank #2 (Buy).

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TOYOTA MOTOR CP (TM): Free Stock Analysis Report

METALDYNE PERFM (MPG): Free Stock Analysis Report

POWER SOL INTL (PSIX): Free Stock Analysis Report

SORL AUTO PARTS (SORL): 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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