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China Automotive Systems (CAAS) Soars 9.8%: Is Further Upside Left in the Stock?

Zacks Equity Research
·2-min read

China Automotive Systems (CAAS) shares ended the last trading session 9.8% higher at $9.61. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 52.2% gain over the past four weeks.

Shares of China Automotive Systems is riding on the loosening of nationwide COVID curbs in China and a surfeit of government stimulus measures to boost the economy. The company is seeing strong sales in China on the back of higher customer demand for its products. Robust demand for hydraulic products is also driving its top line. CPCA forecasts a 1% year-over-year uptick in vehicle sales in China, which bodes well for China Automotive Systems.

 

This auto parts supplier is expected to post quarterly earnings of $0.07 per share in its upcoming report, which represents a year-over-year change of -56.3%. Revenues are expected to be $138.46 million, down 0.2% from the year-ago quarter.

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Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For China Automotive Systems, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CAAS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

China Automotive Systems is a member of the Zacks Automotive - Original Equipment industry. One other stock in the same industry, ChargePoint Holdings, Inc. (CHPT), finished the last trading session 3.7% lower at $12.49. CHPT has returned 45.4% over the past month.

ChargePoint Holdings, Inc.'s consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.15. Compared to the company's year-ago EPS, this represents a change of +28.6%. ChargePoint Holdings, Inc. currently boasts a Zacks Rank of #3 (Hold).

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Zacks Investment Research