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Aegion (AEGN) Q3 Earnings: What's in Store for the Stock?

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Aegion Corporation  is set to report third-quarter 2016 results on Oct 31, after the market closes. The company posted a year-over-year decline in both earnings and sales in second-quarter 2016. Let’s see how things are shaping up for this announcement.

Earnings Whispers

Our proven model does not conclusively show that Aegion is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below:

Zacks ESP: Aegion has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 36 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Aegion’s Zacks Rank #3 increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

Surprise History

Last quarter, Aegion posted a negative earnings surprise of 8%. Notably, the company has delivered an average positive earnings surprise of 12.41% over the trailing four quarters.

AEGION CORP Price and EPS Surprise

 

AEGION CORP Price and EPS Surprise | AEGION CORP Quote

Factors to Consider

Aegion’s second quarter was more challenging than expected because of several short-term factors and these will potentially affect results in the second half of the year as well. Margins were negatively affected by a dramatic slowdown of work releases from oil and gas customers since the wildfires in Western Canada as well as due to the winding down of the energy services upstream work, part of the downsizing in central California and the decision to exit the Permian Basin, given difficult market conditions. This may again hurt margins in the near future. Moreover, the company is expected to continue to face currency headwinds.

Nevertheless, Aegion is poised to benefit from the improving municipal pipe rehabilitation market and execution of the Appomattox contract.  Moreover, the company’s Infrastructure Solutions segment is also expected to perform well in the second half of 2016 based on a strong outlook in the N.A. wastewater cured-in-place pipe (“CIPP”) market. The company is poised to benefit from rising order pattern and new contract wins. However, soft oil prices are likely to remain a headwind.

Stocks to Consider

Here are some companies in the construction sector that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat:

Armstrong World Industries, Inc. (AWI - Free Report) with an Earnings ESP of +1.32% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens Corning (OC - Free Report) with an Earnings ESP of +1.01% and a Zacks Rank #3.

Ply Gem Holdings, Inc with an Earnings ESP of +7.35% and a Zacks Rank #3.

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