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What Awaits Westport Innovations (WPRT) in Q1 Earnings?

Westport Innovations Inc. WPRT is expected to report first-quarter 2016 results on May 12. In the last quarter, the company posted a negative earnings surprise of 40%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Westport Innovations regularly launches new products to boost sales. The company also has strategic relationships with engine producers, truck manufacturers and automotive manufacturers. These strategic relationships allow the company to utilize its collaborators’ manufacturing plants, supply chains, back office systems, and distribution and sales networks. This aids significant cost savings. Moreover, Westport Innovations regularly makes investments and acquisitions related to technologies and businesses that complement or help in the commercialization of its products.

However, Westport Innovations has been incurring losses over the past several years, while its cash position is weakening. The company has also witnessed a declining revenue trend in the recent past. The top line deteriorated in all four quarters and full-year 2015. Additionally, Westport Innovations is facing challenges due to fluctuations in exchange rates, low oil prices and economic volatility in some markets.

Earnings Whispers

Our proven model does not conclusively show that Westport Innovations is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Westport Innovations’ Earnings ESP is -27.59% as the Most Accurate estimate of a loss of 37 cents is lower than the Zacks Consensus Estimate of a loss of 29 cents.

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

Stocks to Consider

CarMax Inc. KMX, with an Earnings ESP of +1.08% and a Zacks Rank #3 (Hold), is a stock in the auto sector that is expected to beat earnings this season. The company will report first-quarter fiscal 2016 (ended May 31, 2016) financial numbers on Jun 21.

Nissan Motor Co. Ltd. NSANY will release fourth-quarter and fiscal 2015 (ended Mar 31, 2016) results on May 12. The company holds a Zacks Rank #2 (Buy).

Volkswagen AG VLKAY will report first-quarter 2016 results on May 31. The company carries a Zacks Rank #2.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CARMAX GP (CC) (KMX): Free Stock Analysis Report
NISSAN ADR (NSANY): Free Stock Analysis Report
VOLKSWAGEN-ADR (VLKAY): Free Stock Analysis Report
WESTPORT INNOV (WPRT): Free Stock Analysis Report
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