Zacks Industry Rank Analysis is written by John Blank, PhD, Chief Equity Strategist, Zacks.com.
Shifting Into Overdrive
As the ice roads of commerce thaw, more people and businesses are hitting the highway with the demand for automotive essentials in tow. Last week, original equipment manufacturing for automotive and trucking was coasting at #48 on the Zack's Industry Rank list, but this week it found high gear.
Automotive/Trucking Original Equipment now enjoys a Zack's Industry Rank of #36.
This industry of 31 companies has recently seen 88 positive revisions to annual earnings estimates compared to 38 negative revisions. Positive estimate revisions have been averaging a strong +24%. Of course, downward earnings surprises are present, however, the sector has signaled a turn for the positive and a couple key businesses seem to have the green light.
We've also seen this trend reflected in corresponding sectors, including positive movement in Retail/Wholesale Automotive and Trucking, up five on the Zacks Industry Rank this week.
With continued spending, there are important indicators that this demand will drive future positive earnings estimate revisions. Additional favorable analysis of the industry as a whole would reflect this development.
Significant revision of the Zacks Rank within a sector, changing from a Hold to either a Buy or Strong Buy rank is fundamental when looking for advantages. Using this information and knowledge of recent positive estimate activity can provide more insight into the direction of a particular company.
Look closely at the following summaries of two recent earnings surprise candidates. Each was selected based on its current Zacks Rank #1 (Strong Buy) and revision from Zacks Rank #3 (Hold) just one week ago.
Your profits could mirror these successes and may be closer than they appear.
Federal Mogul (Nasdaq: FDML)
FDML is a Zacks Rank #1 (Strong Buy). It moved up from Zacks Rank #3 (Hold) just last week. This company reports quarterly earnings on July 25, 2013.
Federal Mogul Corporation is a leading global supplier of powertrain, chassis and safety technologies, serving original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles. Their most recent earnings surprise was +165% for Q1.
Visteon Corp (NYSE: VC)
VC is a Zacks Rank #1 (Strong Buy). It was raised to its #1 rating within the last week from Zacks rank #3 (Hold). It reports earnings on August 8, 2013.
Visteon Corp. operates as an automotive supplier engaged in the design, engineering and manufacturing of climate, electronic, interior and lighting products for vehicle manufacturers. It broke estimates in Q1 with +75% earnings surprise.
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