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Milacron (MCRN) to Post Q4 Earnings: A Beat in the Cards?

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Milacron Holdings Corp. is scheduled to report fourth-quarter 2016 results on Feb 23, before the market opens. Milacron’s both top-line and bottom-line declined on a year-over-year basis in third-quarter 2016. Let’s see how things are shaping up for this quarter.

Earnings Whispers

Our proven model shows that Milacron is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which have a significantly higher chance of beating earnings.

Zacks ESP: Milacron’s Earnings ESP is +11.43% as the Most Accurate estimate of 39 cents is pegged higher than the Zacks Consensus Estimate of 35 cents. A positive ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Milacron carries a Zacks Rank #2. The combination of the company’s favorable Zacks Rank with a positive ESP makes us confident of an earnings beat.

Notably, the stocks carrying a Zacks Rank #4 and 5 (Sell-rated stocks) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Surprise History

Milacron Holdings Corp. Price and EPS Surprise
 

Milacron Holdings Corp. Price and EPS Surprise | Milacron Holdings Corp. Quote

Milacron has a fairly decent earnings surprise history. Milacron has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 5.66%.

Price Performance

A look at the company’s share price movement in the past three months reveals that Milacron has outpaced the Zacks categorized Manufacturing-Material Handling sub industry. The stock has gained 14.3%, ahead of the sub industry’s rise of 8.3% in the same time frame.

What's Driving the Better-than-Expected Results?

In the last reported quarter, the company has witnessed a 4.3% order growth rate driven by very strong orders in the hot runner business, low-single digit growth in Advanced Plastic Processing Technologies (APPT) segment. Geographically, order growth was strong in Europe, India and Asia markets which helped negate weakness in North America. From an end-market perspective, packaging, consumer goods, and industrial, experienced strong growth. Further, backlog at the quarter end was up 13% compared with the prior-year end.

Profitability will be supported by both revenue growth and margin expansion in the near term. Revenue growth will come from underlying market growth in key segments, geographic expansion of certain product lines, consistent penetration of hot runners and incremental share gain from new products. New products are focused on solidifying the current market position, expanding addressable market through the introduction of technology that displaces other materials, primarily metal and glass.

Since the past two years, Milacron has undertaken a number of organizational redesign and cost-reduction initiatives to improve cost structure and operating flexibility. The key drivers leading to the cost reductions include realigning the overall cost structure, consolidating sales offices and call centers along with optimizing the manufacturing footprint. These actions are likely to boost margins.

Other Stocks to Consider

Milacron is not the only stock looking up this earnings season. Here are some stocks that you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

TechnipFMC plc (FTI - Free Report) has an Earnings ESP of +20.00% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

McDermott International, Inc. has an Earnings ESP of +100.00% and also sports a Zacks Rank #1.

New Residential Investment Corp. carries a Zacks Rank #2 and has an Earnings ESP of +1.69%.

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