LKQ Gears Up for Q3 Earnings: Is a Beat in the Offing?

LKQ Corporation LKQ is slated to release third-quarter 2022 results on Oct 27, before the market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at 96 cents and $3.21 billion, respectively.

For the third quarter, the consensus estimate for LKQ’s earnings per share has moved down by 1 cent in the past 30 days. Its bottom-line estimates imply a decline of 5.9% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues also suggests a year-over-year decrease of 2.6%. Over the trailing four quarters, LKQ surpassed earnings estimates on all occasions, with the average surprise being 12.09%. This is depicted in the graph below:

LKQ Corporation Price and EPS Surprise

LKQ Corporation Price and EPS Surprise

LKQ Corporation price-eps-surprise | LKQ Corporation Quote

Q2 Highlights

In second-quarter 2022, LKQ’s adjusted earnings per share of $1.09 surpassed the consensus metric of $1.02, thanks to higher-than-expected revenues from the Wholesale North American segment. However, the bottom line fell 3.5% year over year. The company reported net sales of $3,341 million, missing the Zacks Consensus Estimate of $3,389 million. In addition, the top line fell 2.1% from the year-ago level.

Earnings Whispers

Our proven model predicts an earnings beat for the automotive replacement parts supplier for the quarter to be reported, as it has the right combination of the two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: LKQ has an Earnings ESP of +1.04%. This is because the Most Accurate Estimate is pegged 1 cent higher than the Zacks Consensus Estimate.

Zacks Rank: It currently carries a Zacks Rank of 3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

The automobile replacement market is less susceptible to business upheavals as owners continue to spend on repair services and replacement parts for maintenance. The ongoing microchip deficit has caused an auto parts shortage that has affected new production. The supply bottleneck likely led consumers to continue using their existing vehicles, consequently increasing the demand for replacement parts and the average age of vehicles. LKQ’s performance for the to-be-reported quarter is expected to have gained from the robust demand for its products driven by the increasing longevity of vehicles.

Also, strategic acquisitions, including Bumblebee batteries in the United States, a workshop concept in the Netherlands, two very small former automotive branch locations in Germany, and the equity interest of its former JV partner in a small aftermarket parts business in Germany are likely to have aided third-quarter 2022 performance. However, increased expenses for the ocean and land freight and rising operational and commodity costs might have limited margins.

Here's a sneak peek at the firm’s key revenue projections for the to-be-reported quarter.

The Zacks Consensus Estimate for quarterly revenues from parts and services in Europe, which has the highest contribution to the company’s revenues, is pegged at $1,403 million, suggesting a decline from $1,520 million recorded in the prior-year quarter. The consensus estimate for revenues from parts and services in North America unit for the third quarter is pegged at $1,008 million, indicating a fall from $1,077 million recorded in the prior-year period. The Zacks Consensus Estimate for quarterly revenues from parts and services in the Specialty segment is $493 million, implying a rise from $465 million reported in the prior-year quarter.

Other Stocks With Favorable Combination

Let’s take a look at some other players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:

Oshkosh OSK will release third-quarter 2022 results on Oct 27. The company has an Earnings ESP of +3.36% and a Zacks Rank #3.

The Zacks Consensus Estimate for Oshkosh’s to-be-reported quarter’s earnings and revenues is pegged at $1.15 per share and $2.15 billion, respectively. OSK surpassed earnings estimates in two of the trailing four quarters and missed in the rest, with the average surprise being a negative 13.62%.

Lear LEA will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +3.56% and a Zacks Rank #3.

The Zacks Consensus Estimate for Lear's to-be-reported quarter’s earnings and revenues is pegged at $2.11 per share and $5.16 billion, respectively. LEA surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 14.41%.

LCI Industries LCII will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +0.96% and a Zacks Rank #3.

The Zacks Consensus Estimate for LCI Industries’ to-be-reported quarter’s earnings and revenues is pegged at $2.43 per share and $1.17 billion, respectively. LCII surpassed earnings estimates in all of the four of the trailing four quarters, with the average surprise being 26.48%.

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