As we head into the busiest week of the Q1 earnings season, a lot of attention is focused on the auto sector, which is expected to report the best earnings growth among the 16 Zacks sectors, per our estimates. The overall outlook for the S&P 500 companies remains weak, with projections of a 9.7% decline in earnings per our Earnings Preview report. Earnings growth is expected to be positive for only 6 of the Zacks sectors, led by auto, which is anticipated to record 20.6% improvement over the prior-year quarter. Revenues of major auto companies are expected to be driven by strong U.S. sales and China sales in the first quarter. The bottom line will also benefit from an increase in the sales of higher margin vehicle segments, such as SUVs and light trucks, due to low fuel prices. However, the negative impact of foreign currency translation remains a major headwind for the auto sector. Sluggishness in many emerging markets and expenses related to safety recalls are other challenges. Among the many companies lined up to report this week, let’s see what awaits these two major auto stocks scheduled to release their results on Apr 26. PACCAR Inc. PCAR has a record of generating net profit for 77 consecutive years. The company is well positioned in the key non-U.S. markets due to its strategic investments. However, Class 8 industry retail sales for the U.S. and Canada are expected to decrease in 2016, which indicates the possibility of a year-over-year decline in the first quarter. This may adversely impact the company’s upcoming results. Moreover, PACCAR will record a charge of 850 million euros ($950 million) in the first quarter related to the ongoing investigation by the European Commission into anti-competitive practices by all major European medium- and heavy-duty truck manufacturers. This will adversely affect the company’s financials. PACCAR, carrying a Zacks Rank #3 (Hold), has an Earnings ESP of -3.13% for the first quarter of 2016. The Zacks Consensus Estimate for the quarter is pegged at 96 cents. However, PACCAR has beaten the Zacks Consensus Estimate in 3 of the trailing 4 quarters with a positive average surprise of around 3.52%. (Read more: Will PACCAR's Earnings Disappoint Investors in Q1?) Penske Automotive Group, Inc. PAG has an Earnings ESP of 0.00% for the first quarter of 2016. The Zacks Consensus Estimate for this Zacks Rank #3 stock’s earnings is pegged at 87 cents per share. Penske Automotive has been expanding its dealership network to boost earnings. In Jan 2016, the company entered the Japanese market with the purchase of 49% equity ownership interest in Nicole Group, a luxury dealership group that operates in Japan. Penske Automotive has also been benefiting from rising new vehicle sales over the past few years. However, the company is facing challenges such as intensifying competition in the industry and fluctuations in foreign exchange rates. These factors can adversely affect its quarterly results. Penske Automotive delivered mixed earnings surprises in the last four quarters. It outperformed the Zacks Consensus Estimate in 2 of the trailing 4 quarters and reported in-line results in one quarter. This resulted in an average beat of around 1.19% over the last four quarters. (Read more: Penske Automotive Q1 Earnings: A Surprise in Store?) Check back later for our full write-up on the earnings releases of these stocks. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PENSKE AUTO GRP (PAG): Free Stock Analysis Report PACCAR INC (PCAR): Free Stock Analysis Report To read this article on Zacks.com click here.