Volkswagen (VWAGY) to Post Q3 Earnings: What's in the Offing?

Zacks Equity Research
·4-min read

Volkswagen AG VWAGY is slated to release third-quarter 2020 results on Oct 29, before the bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 54 cents on revenues of $66.9 billion.

Highlights of Q2 Earnings

Hit by the coronavirus pandemic-led shutdowns in showrooms and factories, Volkswagen reported losses in the second quarter of 2020. The Germany-based car giant posted a loss of 36 cents per share, as against the year-ago quarter’s earnings of 89 cents. Moreover, the auto giant’s quarterly revenues plunged 33.7% year over year to $45.2 billion. 

Trend in Estimate Revisions

The Zacks Consensus Estimate for Volkswagen’s third-quarter earnings per share has remained unrevised in the past seven days. It also compares unfavorably with the year-earlier quarter’s earnings of 84 cents per share, indicating a year-over-year plunge of 35.7%. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year decline of 2.03%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Volkswagen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Volkswagen has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Volkswagen currently holds a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

The coronavirus pandemic has significantly marred the auto sector with factory closures, low footfall in dealerships and supply-chain disruptions. Depressed demand of vehicles and weak consumer confidence amid the coronavirus mayhem are likely to have hurt Volkswagen’s third-quarter earnings and sales.

Notably, the automaker’s vehicle deliveries for the July-September period in North America came in at 209,000 units, down 13.7% from the 242,300 units delivered in the prior-year quarter.

In addition, amid the economic slowdown, Volkswagen’s vehicle sales in the Western European market during the quarter in discussion declined 2.4% year over year to 834,200 units.

The plunge in the delivery count was primarily due to significant decline in deliveries for the SEAT and Scania brands, which slipped 12.1% and 25.4%, year on year, respectively. Apart from this, Volkswagen passenger car deliveries for the quarter in discussion dropped to 1,475,400 units, marking a 2.7% year-over-year fall.
 
Nonetheless, with China being the first country to recover from the coronavirus crisis, vehicle sales in the nation gained momentum during the third quarter. Volkswagen, which has the largest presence in China, is anticipated to have gained from the recovering auto sales growth in the world’s largest car market. Volkswagen delivered 1,069,200 units in China during the third quarter, up almost 3% from the prior-year quarter.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Lear Corporation LEA has an Earnings ESP of +2.8% and currently flaunts a Zacks Rank of 1. It is scheduled to report earnings results on Nov 30.

General Motors GM has an Earnings ESP of +0.68% and carries a Zacks Rank of 3 currently. The company will announce quarterly figures on Nov 5.

Cooper Tire Rubber Company CTB has an Earnings ESP of +20.9% and currently holds a Zacks Rank #3. The company is slated to release third-quarter numbers on Oct 29.

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Cooper Tire Rubber Company (CTB) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Lear Corporation (LEA) : Free Stock Analysis Report
 
Volkswagen AG (VWAGY) : Free Stock Analysis Report
 
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