The Zacks Analyst Blog Highlights Tesla, Genuine Parts Company, Ford, Oshkosh and Lear

For Immediate Release

Chicago, IL – October 25, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla TSLA, Genuine Parts Company GPC, Ford F, Oshkosh Corp OSK, Lear Corp. LEA

Here are highlights from Monday’s Analyst Blog:

3 Auto Stocks Set for Q3 Earnings Beats

The third-quarter earnings season for the Auto-Tires-Trucks sector kicked off last week. Two of the S&P 500 sector components have released quarterly results so far. These include electric vehicle (EV) king Tesla and auto replacement parts provider Genuine Parts Company. The profitability picture thus far looks resilient in the face of headwinds (including supply chain problems and inflationary pressure) that the space has been witnessing. Both Tesla and Genuine Parts not just topped earnings expectations but also witnessed year-over-year growth in profits.

With the help of the Zacks Stock Screener, we have identified a few auto players — Ford, Oshkosh Corp, Lear Corp.— which are positioned to outshine the Zacks Consensus Estimate in third-quarter earnings.

What's Shaping the Q3 Earnings Season for Auto Stocks?

Despite aggressive rate hikes and economic uncertainty, demand for vehicles has somewhat managed to hold ground. With inflation at levels not seen in decades, the Fed has been forced to become more aggressive, cranking up borrowing rates. On Sep 21, the Fed jacked up interest rates by 75 bps for the third time in a row. Despite the rising financing costs of vehicles, car sales haven't been hit that badly. Per US Automotive News, new vehicle sales volumes inched down just 0.4% year over year.

While sales volumes haven't been much of a dampener, the rising prices of raw materials might have acted as a spoilsport. However, some companies have undertaken smart pricing actions to partially offset the commodity cost inflation. They have been passing on the burden of escalating input costs to consumers through price hikes across models/products. And surprisingly, high sticker prices haven't played much of a deterrent to buyers' appetite so far even as recessionary worries loom large.

Additionally, revenues are likely to have gotten a boost from the soaring popularity of new energy vehicles (including all-electric, hybrids and fuel-cell) that are expected to have fueled deliveries of automakers. In light of the chip crunch, automakers have been prioritizing resources toward high-margin and more popular vehicles like electric cars.

Per the Earnings Trends report dated Oct 12, third-quarter earnings for the auto sector are projected to witness year-over-year growth of 21.6% on 32.7% higher revenues. While the projected earnings growth indicates a decline from a 37.2% rise in earnings witnessed in second-quarter 2022, the top-line growth expectation this time around suggests an increase from 24.5% in the second quarter of 2022.

Picking Potential Winners

While it is not possible to be sure about which companies are well positioned to beat earnings estimates, our proprietary methodology — Earnings ESP — makes it relatively simple. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

The 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. Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

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

Our research shows that for stocks with the above-mentioned combination, the chances of an earnings beat are as high as 70%.

Our Choices

Below we list three auto stocks that have the right mix of elements to pull off a beat this earnings season.

Ford: Ford's third-quarter results are likely to be boosted by an increase in sales volume. The Zacks Consensus Estimate for total wholesale shipments worldwide is pegged at 1,101,000 units, indicating an increase from 1,012,000 units in the year-ago period.The consensus mark for revenues from automotive sales is $37,289 million, implying an uptick from $33,211 million recorded in the corresponding quarter of 2021. Having said that, F envisions third-quarter total adjusted EBIT to drop on a sequential and a yearly basis amid commodity cost inflation.

Ford has an Earnings ESP of +2.74% and a Zacks Rank #3. This leading truck engine maker is scheduled to release third-quarter results on Oct 26. The Zacks Consensus Estimate for Ford's to-be-reported quarter's earnings and revenues is pegged at 29 cents per share and $37.3 billion, respectively. F surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 24.5%.

Oshkosh: Frequent business wins and a comprehensive offering of innovative new products are anticipated to drive Oshkosh's results. Our model projects revenues and operating profits from Access Equipment and Commercial segments to increase year over year in the third quarter of 2022. The Zacks Consensus Estimate for revenues and profits from Access Equipment is pegged at $1,030 million and $89 million, respectively. The same for the Commercial segment is pegged at $270 million and $18 million, respectively.

Oshkosh has an Earnings ESP of +3.36% and a Zacks Rank #3. This auto equipment maker is scheduled to release third-quarter results on Oct 27. The Zacks Consensus Estimate for OSK's to-be-reported quarter's earnings and revenues is pegged at $1.15 per share and $2.14 billion, respectively. Oshkosh surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average negative surprise being 13.6%.

Lear: The buyouts of M&N Plastics and Kongsberg Automotive have strengthened Lear's E-Systems and Seating business, respectively. Rising consumer demand for vehicle content — requiring signal, data and power management — and increasing electrification efforts by the company augurs well. The Zacks Consensus Estimate for third-quarter revenues and profits from the E-Systems unit implies year-over-year growth of 19.4% and 91%, respectively. The consensus mark for revenues and profits from the Seating unit implies year-over-year growth of 23.4% and 75.6%, respectively.

Lear has an Earnings ESP of +4.02% and a Zacks Rank #3. This automobile parts company is scheduled to release third-quarter results on Nov 1. The Zacks Consensus Estimate for LEA's to-be-reported quarter's earnings and revenues is pegged at $2.12 per share and $5.16 billion, respectively. Lear surpassed earnings estimates in three of the trailing four quarters and missed on the other, with the average surprise being 14.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Ford Motor Company (F) : Free Stock Analysis Report
 
Genuine Parts Company (GPC) : Free Stock Analysis Report
 
Lear Corporation (LEA) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
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