Custom Truck One Source, Inc. (CTOS) Exceeds Second Quarter Earnings Estimates

VSUstom Truck One Source, Inc. (CTOS) reported quarterly earnings of $0.03 per share, beating Zacks consensus estimate of a loss of $0.01 per share. That compares to a loss of $0.22 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a 400% earnings surprise. A quarter ago, this company was expected to post a loss of $0.04 per share when it was actually producing breakeven earnings, delivering a 100% surprise.

In the past four quarters, the company has exceeded consensus EPS estimates three times.

Custom Truck One Source, Inc., which is part of the Zacks Automotive – Original Equipment industry, posted revenue of $362.11 million for the quarter ended June 2022, missing Zacks’ consensus estimate by 4.64%. That compares to revenues of $375.11 million a year ago. The company has exceeded consensus revenue estimates twice in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Custom Truck One Source, Inc. shares are down about 17.4% year-to-date against a -13.1% decline for the S&P 500.

What’s next for Custom Truck One Source, Inc.

While Custom Truck One Source, Inc. has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the pattern of estimate revisions for Custom Truck One Source, Inc. is mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.02 on $414.2 million in revenue for the upcoming quarter and $0.04 on $1.59 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Automotive – Original Equipment is currently in the bottom 44% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

China Automotive Systems (CAAS), another stock in the same sector, has yet to report results for the quarter ending June 2022.

This auto parts supplier is expected to post a quarterly loss of $0.05 per share in its next report, representing a year-over-year change of -150%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Revenue from China Automotive Systems is expected to be $104.93 million, down 13% from the year-ago quarter.

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