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The Zacks Analyst Blog Highlights: Goodyear Tire & Rubber, O'Reilly Automotive, Ford Motor and BorgWarner

For Immediate Release

Chicago, IL – April 27, 2016 – 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 Goodyear Tire & Rubber Company (GT), O'Reilly Automotive Inc. (ORLY), Ford Motor Co. (F) and BorgWarner Inc. (BWA).

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Here are highlights from Tuesday’s Analyst Blog:

Auto Stocks Reporting Q1 Earnings This Week: F, BWA, GT, ORLY

After Genuine Parts Company, Harley-Davidson, Inc., General Motors Co. and AutoNation Inc. kick-started the Q1 earnings season with positive surprises, investors are now looking forward to the next big players – The Goodyear Tire & Rubber Company, O'Reilly Automotive Inc., Ford Motor Co. and BorgWarner Inc., which are slated to report results this week.

The general mood is somewhat pessimistic due to falling first-quarter estimates over the last three months. As per our Earnings Preview report, total S&P earnings for the first quarter are expected to be down 9.4% on a 0.8% decline in revenues. Earnings growth is expected to be positive for only 6 of the 16 Zacks sectors. The outlook is bright for the Auto sector, which is anticipated to record the highest year-over-year growth among all sectors.

The auto industry witnessed a good start to the year, with strong U.S. sales by big companies. Revenues of major automakers are expected to be driven by robust U.S. and China sales in the first quarter. Earnings will also gain from an increase in the sales of higher margin vehicle segments, such as SUVs and light trucks, due to low fuel prices.

However, the adverse impact of foreign currency translation remains a major headwind for the auto sector. Sluggishness in many emerging markets and expenses related to safety recalls are other hurdles.

Among the many companies scheduled to report this week, let’s see what’s in store for these major auto stocks gearing up to release their results.

The Goodyear Tire & Rubber Company (GT) is set to report first-quarter 2016 results on Apr 27. The company has an http://www.zacks.com/earnings/earnings-surprise-predictions/"> Earnings ESP of 0.00% and a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for the quarter is pegged at 70 cents.

Goodyear regularly launches innovative products and services to boost sales. The company is benefiting from lower raw material costs, strong economic trends in North America and continued cost savings. In Jun 2015, Goodyear signed an agreement to dissolve the global alliance with Sumitomo Rubber Industries, Ltd. The deal is expected to be accretive to its earnings from the first quarter of 2016 due to the removal of Sumitomo Rubber’s minority interest in Goodyear Dunlop Tires Europe B.V.

However, the company’s revenue has been declining over the years due to unfavorable foreign currency translation, lower sales in other tire-related businesses, and a decline in price and product mix. These trends are expected to continue this year as well.

The company outperformed the Zacks Consensus Estimate in all of the trailing 4 quarters with an average beat of around 15.05%. (Read more: Goodyear to Report Q1 Earnings: A Surprise in Store? )

O'Reilly Automotive Inc. (ORLY) is slated to release its first-quarter 2016 earnings on Apr 27, after the market closes. The company has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at $2.49.

O’Reilly Automotive has reported comparable sales growth and record income for all 23 years for which it has been public. The company continues with its growth-led strategy to increase earnings for the coming quarters. The company expects earnings to increase 17–22% in the first quarter on a year-over-year basis. The company will also benefit from expansion through new store openings. However, O’Reilly Automotive’s concentrated store locations make it vulnerable to regional economic volatility and other localized problems.

The company delivered positive earnings surprises in each of the preceding four quarters with an average beat of around 6.43%. (Read more: O'Reilly Automotive Q1 Earnings: Surprise in Store? )

Ford Motor Co. (F) is set to report first-quarter 2016 results on Apr 28. The automaker has an Earnings ESP of 11.63% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 43 cents.

Ford reported strong sales volumes in all major markets for the first quarter, which should significantly augment revenues. The company’s U.S. sales increased 9% to 645,626 vehicles – the best since 2006. Ford’s China sales also improved 14% year over year to 314,454 vehicles in the quarter. Sales in Europe increased 8.5% to 363,500 vehicles. Ford’s impressive product launches are helping boost sales volume.

However, Ford expects weak margins from North America and higher losses in South America this year. The automaker’s South American operation has been facing challenges due to weakness in the industry, unfavorable exchange rates, high inflation, capital controls and changing regional trade policies.

Ford has beaten the Zacks Consensus Estimate in 2 of the trailing 4 quarters with a positive average surprise of around 11.17%. (Read more: Ford to Report Q1 Earnings: Will It Outshine Estimates? )

BorgWarner Inc. (BWA) is scheduled to report first-quarter 2016 results on Apr 28. The company has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its earnings is pegged at 79 cents per share.

BorgWarner expects net sales growth for first-quarter 2016 to be in the range of 8.3%–13.3%. The Remy International acquisition is expected to have a positive impact of $247–$257 million, or 12.4%–13%. Moreover, a healthy balance sheet and ample cash flows help BorgWarner to return capital to shareholders. These efforts also positively impact earnings per share.

However, excluding the impact of weaker foreign currencies and the Remy International buyout, the year-over-year change in net sales for the first quarter is estimated to range between a decline of 0.3% and an increase of 2.7%. The company envisions earnings (excluding the Remy International acquisition) in a range of 72–76 cents per share, down 2%–8% from 78 cents earned in first-quarter 2015.

BorgWarner delivered mixed earnings surprise in the last four quarters. It outperformed the Zacks Consensus Estimate in 2 of the trailing 4 quarters with an average negative surprise of around 2.45%. (Read more: BorgWarner Q1 Earnings: Is a Surprise in Store? )

Check back later for our full write-up on the earnings releases of these stocks.

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GOODYEAR TIRE (GT): Free Stock Analysis Report
 
O REILLY AUTO (ORLY): Free Stock Analysis Report
 
FORD MOTOR CO (F): Free Stock Analysis Report
 
BORG WARNER INC (BWA): Free Stock Analysis Report
 
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