Honda (HMC) To Report Q3 Earnings: What's In The Cards?

Honda Motor Co., Ltd. (NYSE:HMC) is expected to report third-quarter fiscal 2019 (ended December 2018) results on Feb 1. In the last reported quarter, the company delivered a positive earnings surprise of 35.4%. In fact, Honda surpassed expectations in each of the trailing four quarters, the average being 29.7%.

Honda has an expected long-term growth rate of 2.9%. In the past three months, shares of Honda have outperformed the industry it belongs to. The stock has improved 7.5% compared with the industry’s rise of 6.5%.

Let’s see, how things are shaping up for this announcement.

Honda Motor Co., Ltd. Price and EPS Surprise

Honda Motor Co., Ltd. Price and EPS Surprise | Honda Motor Co., Ltd. Quote

Factors Influencing This Quarter

Honda is collaborating with companies to expand business. Partnerships for the development of autonomous and electric vehicles are enabling the company to offer latest technologies and expand its business. In October 2018, Honda made the announcement of teaming with General Motors to transform mobility by rapidly developing autonomous vehicle technology. The partnership aims to develop autonomous vehicle for Cruise that can be manufactured in large numbers for global deployment. Additionally, the companies plan to explore global opportunities for commercial deployment of Cruise network.

However, Honda has witnessed cases of vehicle recalls in the past few months, which do not bode well for its soon-to-be-released earnings results.

Earnings Whispers

Our proven model does not conclusively show that Honda is likely to beat estimates in this reporting cycle. This is because a stock needs to have a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Honda has an Earnings ESP of 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Honda currently sports a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially, when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks that have the right combination of elements to deliver a beat this time around.

Oshkosh Corporation (NYSE:OSK) has an Earnings ESP of +13.30% and a Zacks Rank of 3. The company is slated to report fourth-quarter 2018 results on Jan 30.

General Motors Company (NYSE:GM) has an Earnings ESP of +11.39% and a Zacks Rank #2. Its fourth-quarter 2018 results are scheduled to release on Feb 6.

Wabco Holdings Inc (NYSE:WBC) has an Earnings ESP of +2.81% and carries a Zacks Rank of #3. Its fourth-quarter 2018 results are slated to release on Feb 15.

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