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Harley-Davidson Inc.

Exchange: New York Stock Exchange | Oct 22, 2018, 7:38 PM EDT

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Auto Stocks' Q3 Earnings Queued for Oct 24: GM, PCAR, FCAU

Third-quarter 2017 earnings season for the auto sector is in full swing. Some important companies which have already reported results include Harley-Davidson, Inc. HOG and Genuine Parts Company GPC. While Harley-Davidson’s third-quarter 2017 earnings per share came in line with the Zacks Consensus Estimate, Genuine Parts Company reported lower-than-expected earnings.

That said, three auto giants — General Motors Company GM, PACCAR Inc PCAR and Fiat Chrysler Automobiles N.V. FCAU — are expected to come up with their results on Oct 24.

Per the latest Earnings Outlook, as of Oct 18, 52 companies from the S&P 500 category have already announced their results. These companies registered earnings and revenues beat ratios of 76.9% and 73.1%, respectively. As of that date, 10% companies from the Auto sector have reported earnings for the quarter ended Sep 30, 2017.

However, third-quarter 2017 earnings and revenue growth for auto companies are expected to be in the negative territory. Auto stocks are expected to register 17.4% and 5.6% year-over-year decline in earnings and revenues, respectively. However, the S&P 500 companies are expected to register 3% and 4.9% year-over-year growth in earnings and revenues, respectively, during the quarter.

Automakers are witnessing a radical shift in their operations. The speed at which consumers’ preference pattern is changing, has prodded a number of automakers to reassess their strategies. Added to this is the compulsion of manufacturing electric and green cars, which are likely to bring in numerous changes in the industry.

Let’s take a look at the three auto companies scheduled to announce their results tomorrow.

We relied on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of Zacks Rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.

Detroit, MI-based General Motors is a leading global automotive company. Our model predicts that the company is likely to deliver a positive surprise as it currently has an Earnings ESP of +3.14% and a Zacks Rank #3.

General Motors has a positive outlook for 2017, mainly driven by robust retail crossover sales. In September 2017, the company’s total U.S. vehicles sales increased 11.9% year over year. In August, too, the auto giant’s total U.S. sales rose 7.5%. Higher retail sales and rise in fleet vehicle deliveries were responsible for this rise in sales in two consecutive months (Read more: General Motors’ Q3 Earnings: Is a Beat in the Cards?).

Headquartered in Bellevue, WA, PACCAR Inc. is the third largest manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks. Per our model, the company is likely to deliver a positive earnings surprise, as it currently has an Earnings ESP of +0.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

For fiscal 2017, the company anticipates to sell 200,000-220,000 units of Class 8 retail in the United States and Canada, driven by robust economy and high levels of freight tonnage. For Europe, the company estimates to sell about 290,000-310,000 units (Read more: PACCAR to Report Q3 Earnings: Is a Beat in Store?).

PACCAR Inc. Price and EPS Surprise

PACCAR Inc. Price and EPS Surprise | PACCAR Inc. Quote

Fiat Chrysler is engaged in designing, engineering, manufacturing, distributing, and selling vehicles, components, and production systems. The company is unlikely to deliver a positive surprise as it currently has an Earnings ESP of -10.00% and a Zacks Rank #1.

For 2017, Fiat Chrysler anticipates revenues to be in the range of €115-€120 billion ($123.4-$128.8 billion) compared with the €111 billion earned in 2016. The company projects adjusted net profit of more than €3 billion ($3.2 billion), up from €2.52 billion recorded in 2016 (Read more: What's in the Cards for Fiat Chrysler in Q3 Earnings?).

Will You Make a Fortune on the Shift to Electric Cars?

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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

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