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What's in Store for Ferrari (RACE) This Earnings Season?

Ferrari N.V. RACE is set to report third-quarter 2017 results, before the market opens on Nov 2. Last quarter, the company delivered a positive earnings surprise of 19.7%. It also surpassed estimates in each of the trailing four quarters, with an average beat of 27.9%.

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

Ferrari N.V. Price and EPS Surprise

Ferrari N.V. Price and EPS Surprise | Ferrari N.V. Quote

Factors Influencing This Quarter

Ferrari, a former subsidiary of Fiat Chrysler Automobiles N.V., has diversified its revenue sources and generates majority of the same from selling luxury cars, engines and Ferrari brand merchandise. The company also owns a Formula 1 racing team as well as theme parks.

However, Ferrari has been facing challenges due to recalls related to the Takata airbags. The company has been making more recalls and has also raised an expected expenditure on that front.

Over the past 30 days, the Zacks Consensus Estimates for both the current quarter and full-year 2017 have remained unchanged. In second-quarter 2017, Ferrari raked in adjusted earnings of 79 cents per ADR that surpassed the Zacks Consensus Estimate of 66 cents. For third-quarter 2017, the Zacks Consensus Estimate for earnings is pegged at 72 cents per ADR.

Earnings Whispers

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

Zacks ESP: The Earnings ESP for Ferrari is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at 72 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ferrari carries a Zacks Rank #1, which increases the predictive power of ESP. However, the stock’s ESP of 0.00% doesn’t make us confident of a positive earnings surprise.

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

Stocks to Consider

A few companies with the right combination of elements to come up with an earnings beat this quarter are:

Meritor, Inc. MTOR has an Earnings ESP of +4.26% and a Zacks Rank of 1. The company is expected to release fourth-quarter 2017 results on Nov 15. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +3.99% and a Zacks Rank 3. The company is expected to release third-quarter 2017 results on Nov 3.

Adient PLC ADNT has an Earnings ESP of +0.62% and a Zacks Rank #2. The company’s fourth-quarter 2017 results are expected to release on Nov 2.

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