Industrial Stocks Earnings Queued for May 2: EMR, ETN & More
Zacks Equity Research
Updated
The Q1 earnings season is in full swing and we have crossed the halfway mark in the Q1 reporting cycle for the S&P 500 index (as on Apr 28). Earnings of these 288 S&P 500 members (accounting for 63.8% of the index’s total market capitalization) are up 13.7% on 8.2% higher revenues.
Of the companies that have reported results, 72.6% surpassed earnings estimates, with 62.1% coming ahead of revenue estimates. Clearly, growth has been steadily accelerating compared to the preceding quarter and is actually on pace to reach its highest level in nearly three years. Notably, the growth is quite broad based in terms of sectors, as Finance, Technology, Industrials, Basic Materials and Energy have all performed well. (For more details, read our latest Earnings Preview article: The Tech Sector's Strong Earnings Power).
In fact, our latest data projects that the earnings for the S&P 500 companies are now on track to grow an impressive 11.2% from the year-ago period, on 6.2% higher revenues. This is comparable to earnings growth of 7.4% recorded in fourth-quarter 2016 on 4.8% higher revenues.
The Industrial Products space is one of the sectors expected to chart positive earnings growth this quarter. In fact, its earnings are on track to be up 21% in the quarter (which is the highest amongst all Zacks sectors), on 8% higher sales compared with the last year.
Let’s have a look at how some industrial companies like Emerson Electric Company EMR, Eaton Corporation, PLC ETN, Terex Corporation TEX and Xylem Inc. XYL, ahead of their scheduled announcements tomorrow.
Emerson Electric is engaged principally in the worldwide design, manufacture and sale of a broad range of electrical, electromechanical and electronic products and systems. The company has a decent earnings surprise history, having beaten estimates thrice in the trailing four quarters, for an average positive surprise of 5.5%. In the last reported quarter, the company surpassed estimates by 14%.
We do not expect Emerson Electric to beat expectations this quarter. Though the company’s Zacks Rank #2 (Buy) increases the predictive power of ESP, its Earnings ESP of 0.00% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at 58 cents. (For more details, read: Emerson to Report Q2 Earnings: What Lies in Store?).
Emerson Electric Company Price and EPS Surprise
Emerson Electric Company Price and EPS Surprise | Emerson Electric Company Quote
For a possible earnings beat, the company should have the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1(Strong Buy), 2 or 3 (Hold). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Eaton, a power management company, has a decent earnings surprise history, having beaten estimates thrice in the trailing four quarters, for an average positive surprise of 1.6%. In the last reported quarter, the company surpassed estimates by 1.8%.
Our quantitative model hints at an earnings beat for this Zacks Rank #2 company in Q1. This is because it has anEarnings ESP of +2.30% (the Most Accurate estimate of 89 cents being higher than the Zacks Consensus Estimate of 87 cents), in addition to the favorable Zacks Rank.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Similarly, we expect Terex Corporation to outperform estimates when it reports quarterly results tomorrow. The company is a global manufacturer of a broad range of construction and mining related capital equipment. The company has a volatile earnings history, having beaten estimates strongly in two of the trailing four quarters for two misses, with an average positive surprise of 18.5%. In the last reported quarter, the company exceeded earnings estimates by a whopping 216.7%.
A favorable rank and positive Earnings ESP hint toward an earnings beat this season for the company.For the to-be-reported quarter, the company’s Earnings ESP of +66.67% and a favorable Zacks Rank #2 indicate that Milacron Holdings’ earnings will likely beat estimates this quarter. Its Most Accurate estimate of a loss of 1 penny is narrower than the Zacks Consensus Estimate of a loss of 3 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.
Terex Corporation Price and EPS Surprise
Terex Corporation Price and EPS Surprise | Terex Corporation Quote
Xylem provides water technology solutions, water and wastewater treatment solutions, and industrial pumps and related technologies. The company has an impressive earnings surprise history, having beaten estimates each time in the trailing four quarters, for an average positive surprise of 2.1%. In the last reported quarter, the company surpassed estimates by 1.5%.
Our proven model does not conclusively show that Xylem will beat earnings this quarter as it currently carries a Zacks Rank #3 and -5.13% Earnings ESP (as the Most Accurate estimate of 37 cents is lower than the Zacks Consensus Estimate of 39 cents). Though the company’s Zacks Rank #3 increases the predictive power of ESP, its negative Earnings ESP makes surprise prediction difficult. (Read More: What's in the Cards for Xylem this Earnings Season?)
Xylem Inc. Price and EPS Surprise
Xylem Inc. Price and EPS Surprise | Xylem Inc. Quote
Keep an eye on our full earnings articles to see how these players finally fared in quarter.
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