PACCAR Inc. (NASDAQ:PCAR) is set to report second-quarter 2016 results on Jul 26. In the last quarter, the company had delivered a positive earnings surprise of 4.21%. Further, PACCAR posted positive earnings surprises in three of the trailing four quarters with an average beat of 3.07%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
PACCAR is well positioned in the key non-U.S. markets due to its strategic investments. The company continues to expand its global network of strategically located parts distribution centers. These factors should positively impact second-quarter earnings.
However, Class 8 industry retail sales for the U.S. and Canada are expected to be in the range of 220,000–250,000 units in 2016, lower than the prior projection of 230,000–260,000 units as well as 278,000 units sold in 2015. This indicates the possibility of a year-over-year decline in the second quarter as well, which may adversely impact the company’s upcoming results.
Moreover, DAF, owned by PACCAR was recently charged 752.7 million euros ($829.4 million) by the European Union regulators for illegally forming a cartel with a few other truck makers. The company will pay the charge out of the 850 million euros ($936.6 million) provision it created earlier.
Earnings Whispers
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, 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. PACCAR has an Earnings ESP of -0.98% because the Most Accurate estimate stands at $1.01, while the Zacks Consensus Estimate is pegged at $1.02.
Zacks Rank: PACCAR currently has a Zacks Rank #5 (Strong 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
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:
Westport Fuel Systems Inc. (NASDAQ:WPRT) has an Earnings ESP of +9.09% and a Zacks Rank #3 (Hold). The company’s second-quarter 2016 financial results are expected to release on Aug 3.
Allison Transmission Holdings, Inc. (NYSE:ALSN) has an Earnings ESP of +6.35% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Jul 27.
Tower International, Inc. (NYSE:TOWR) has an Earnings ESP of +2.82% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Jul 26.
PACCAR INC (PCAR): Free Stock Analysis Report
TOWER INTL INC (TOWR): Free Stock Analysis Report
WESTPORT FUEL (WPRT): Free Stock Analysis Report
ALLISON TRANSMN (ALSN): Free Stock Analysis Report
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