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Cooper Tire (CTB) to Post Q1 Earnings: A Surprise in Store?

Cooper Tire & Rubber Co. CTB is set to report first-quarter 2016 results on Apr 29. In the last quarter, this tire manufacturer posted a positive earnings surprise of 42.47%. Let us see how things are shaping up for this announcement.

Factors Influencing this Quarter

Cooper Tire continues to develop great products with superior design and functionality. The company expects its improving product mix to expand profitability.

Further, Cooper Tire expects raw material costs to decrease in the first quarter of 2016. Unit volumes are expected to increase in both operating segments this year. Operating results of the International Tire Operations segment is also projected to improve significantly.

Meanwhile, the company has been focusing on expansion in Latin America. In Jan 2016, Cooper Tire announced the opening of a new sales office in São Paulo, Brazil to expand its business in the Latin American market. This will help the company to enter into new markets in the region and also enhance its business in the existing markets.

However, the sale of interest in its former Cooper Chengshan (Shandong) Tire Company Ltd. (“CCT”) joint venture has been adversely affecting the revenues of Cooper Tire.

Earnings Whispers

Our proven model does not conclusively show that Cooper Tire is likely to beat earnings this quarter. This is because a stock needs to have both a positive http://www.zacks.com/earnings/earnings-surprise-predictions/">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: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Cooper Tire has an Earnings ESP of 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at $1.00.

Zacks Rank: Cooper Tire’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

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 that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Ferrari N.V. RACE has an Earnings ESP of +12.50% and a Zacks Rank #3. The company will report first-quarter 2016 financial numbers on May 2.

Ford Motor Co. F has an Earnings ESP of +11.63% and a Zacks Rank #3. The company will report first-quarter 2016 financial numbers on Apr 28.

Axle & Manufacturing Holdings Inc. AXL has an Earnings ESP of +7.04% and a Zacks Rank #3. The company’s first-quarter 2016 financial results are scheduled for release on May 6.

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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
 
FORD MOTOR CO (F): Free Stock Analysis Report
 
AMER AXLE & MFG (AXL): Free Stock Analysis Report
 
COOPER TIRE (CTB): Free Stock Analysis Report
 
FERRARI NV (RACE): Free Stock Analysis Report
 
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