What's In Store For Delphi Automotive's (DLPH) Q2 Earnings?

Delphi Automotive PLC (NYSE:DLPH) is set to report second-quarter 2016 results on Aug 3. In the last quarter, the company had delivered a positive earnings surprise of 1.49%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Delphi Automotive regularly undertakes acquisitions and alliances to enhance its technological capability, increase operating scale, augment its client base and expand geographically. The acquisition of PureDepth will complement and enhance Delphi Automotive's fully-reconfigurable digital display product offerings. In Dec 2015, the company completed the acquisition of HellermannTyton Group PLC, a leading global manufacturer of cable management solutions. The transaction is expected to boost Delphi Automotive’s earnings by 15 cents per share, excluding one-time integration expenses, from 2016 onward. Some of the incremental earnings from these acquisitions will likely be visible in the company’s second-quarter results.

For 2016, Delphi Automotive expects revenues, adjusted earnings per share, adjusted operating income and operating cash flow to increase over 2015. This raises hopes for good results in the second quarter.

On the flip side, the loss of revenues from the divested Thermal Systems business has been negatively impacting Delphi Automotive’s top line. Moreover, economic weakness in South America is leading to lower production in the region by original equipment manufacturers. This can adversely affect Delphi Automotive’s sales.

Earnings Whispers

Our proven model does not conclusively show that Delphi Automotive is likely to beat earnings 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: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Delphi Automotive’ Earnings ESP is -0.65% because the Most Accurate estimate stands at $1.54, while the Zacks Consensus Estimate is pegged at $1.55.

Zacks Rank: Delphi Automotive 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.

DELPHI AUTO PLC Price and EPS Surprise

DELPHI AUTO PLC Price and EPS Surprise | DELPHI AUTO PLC Quote

Stocks to Consider

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:

Westport Fuel Systems Inc. (NASDAQ:WPRT) has an Earnings ESP of +9.09% and a Zacks Rank #3 (Hold). The company’s second-quarter 2016 financial results are expected to release on Aug 3.

Magna International Inc. (NYSE:MGA) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 5.

Cooper Tire & Rubber Co. (NYSE:CTB) has an Earnings ESP of +7.48% and a Zacks Rank #3. The company’s second-quarter 2016 results are expected to release on Aug 4.

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