First-Quarter Earnings Season Update for Auto-Tires-Trucks Sector: Positive Trends Amid Challenges
The Auto-Tires-Trucks sector is currently in the midst of the first-quarter earnings season, and the results so far are looking promising despite the challenges faced by the industry. According to the latest Earnings Trends report, 50% of the S&P 500 auto sector components have reported their Q1 results, with overall earnings up 62.6% from the previous year and revenues up 25.4%. The beat ratio for earnings is at 100%, while for revenues, it stands at 75%.
Looking ahead, the sector is projected to see a 6.5% increase in earnings and an 8.4% increase in revenues for the first quarter. While this growth rate is slightly lower than the previous quarter, the outlook remains positive. Factors such as strong demand for personal vehicles, rising prices of vehicles, and increased deliveries of electric cars are expected to drive revenue growth.
Despite challenges such as supply chain issues, chip shortages, and soaring commodity costs, the sector is expected to perform well in the upcoming earnings reports. To help investors navigate through the earnings season, it is essential to identify stocks that have the potential to beat earnings estimates. One way to do this is by using the Earnings ESP methodology, which looks at the difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Three auto stocks that are well-positioned to beat earnings estimates for the first quarter are Cummins (CMI), Vroom (VRM), and LCI Industries (LCII). Cummins, a leading truck engine maker, is expected to benefit from strong demand in North America and international markets. Vroom, an online used car seller, is likely to see growth in its e-commerce business, while LCI Industries, a manufacturer of components for recreational vehicles, is expected to benefit from the continued demand for RVs.
Overall, the first-quarter earnings season for the Auto-Tires-Trucks sector looks promising, with several companies poised to deliver strong results. By identifying stocks with the right combination of factors, investors can make informed decisions and potentially capitalize on the opportunities presented by the sector.