How to trade Volkswagen and BMW quarterly earnings results based on history

Published Wed, May 3 20238:37 PM EDT

German carmakers Volkswagen and BMW are set to announce their first-quarter earnings later today. The results come at a time of an improving growth environment for both companies. BMW last month, in its annual report, said the automaker remains on track for slightly higher sales this year despite a dip in demand in the first quarter, including in the Chinese market. Similarly, Volkswagen reported significantly increased deliveries for the same period despite weaker business in China, its most important single market. So, how is its stock expected to trade? Using data from FactSet going back five years, CNBC Pro has found how well the two German companies' stock performs against the DAX 40 benchmark index based on different outcomes in their quarterly reports. Data analysis since the last quarter of 2017 found that Volkswagen, which trades as VOW3 on the Frankfurt Stock Exchange, beat consensus estimates for earnings per share (EPS) 80% of the time, or 16 out of 21 quarters. However, despite topping EPS estimates, the carmaker's shares historically underperformed 65% of the time compared to its benchmark on the day of the results. In addition, the stock closed in the red on 11 results days over the same period. Shares of the world's second-largest carmaker improve marginally over a week from the day of the results. VOW3 beat its benchmark 41% of the time when it reported better-than-expected EPS for the quarter. The stock also surpassed the benchmark by 5.4 percentage points a week since the results and 6.5 percentage points a month out under the same scenario. VOW3 was up 6.12% to 123.32 euros ($136.1) at midday London time on Wednesday. Analysts expect Volkswagen to report 6.93 euros EPS, according to figures compiled by FactSet. The consensus price target of all analysts point toward a 24.9% upside over the next 12 months. VOW3-DE 1Y mountain Meanwhile, the CNBC Pro's analysis revealed luxury automaker BMW's stock has historically reacted similarly to Volkswagen's on the day of the results, with shares underperforming the DAX 67% of the time despite beating EPS estimates. However, its fortunes reverse for the better, with shares outperforming the benchmark after a week since the results 67% of the time. The German company shares beat the DAX by 1, 3, and 8 percentage points over the day, week, and month since the results, respectively, on exceeding expectations. However, when the carmaker missed EPS forecasts, shares underperformed the German benchmark by 60% of the time and returned a loss of 3.6, 5, and 3.5 percentage points over the day, week, and month since the results, respectively. Analysts expect BMW to report 4.31 euros EPS, according to figures compiled by FactSet. The consensus price target of all analysts point toward a 6.8% upside over the next 12 months. BMW3-DE 1Y mountain