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ABB Ltd (ABB) to Report Q1 Earnings: What's in the Cards?
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Swiss engineering behemoth ABB Ltd is slated to report first-quarter 2017 results, before the opening bell on Apr 20, 2017.
The company maintained its winning streak in the last quarter with a positive earnings surprise of 22.2%. ABB has consistently beat earnings in the trailing four quarters, with an average positive surprise of 14.3%.
Factors to Consider
ABB’s leading position in key end markets and diligent restructuring efforts are expected to act as major growth drivers for the soon-to-be-reported quarter. Over the past few quarters, investments in power infrastructure upgrades and rising demand for energy efficient products across end markets have boosted ABB’s performance. Positive investments made by all the three major markets of the company, namely, utilities, industry and transport & infrastructure, are expected to boost first quarter financials.
This apart, ABB’s revamped “Next Level Strategy”, which was launched last year and is the company’s blueprint of long-term growth, is expected to act as a major catalyst for first quarter financials. ABB has delivered robust top line growth, operational earnings hike, margin improvement and order improvement leveraging on the benefits of this strategy.
The company is currently in the final stage of the Next Level Strategy after successfully completing the previous two stages, which comprised elaborate business pruning efforts that resulted in the reshuffle of its five segments into four entrepreneurial businesses. Especially, the White-Collar Productivity savings program has garnered significant cost savings over the past few quarters and is expected to benefit first quarter results significantly.
Despite these positives, ABB’s first-quarter results are expected to be marred by prolonged softness in industrial production and economic slowdown in key end markets. For instance, industrial slowdown in China, Canada and the Middle East are likely to thwart sales performance for the soon-to-be-reported first quarter. Moreover, currency translation risks, which have weighed down on the company’s results in the past, are likely to hurt the first-quarter financials as well.
In addition, ABB is also suffering from weak demand in the oil and gas sector. During the fourth-quarter of 2016, orders and revenues in Process Automation were hurt by continued weak demand in process industries, particularly in oil and gas. Lower capital spending for ABB’s key upstream energy end-markets is likely to hurt its financials. We believe precipitous decline of fall in discretionary spending in the upstream oil and gas project are expected to thwart first quarter sales.
Earnings Whispers
Our proven model does not conclusively show that ABB will beat earnings estimates in 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. But that is not the case here as you will see below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -8.33% for ABB as the Most Accurate estimate is pegged at 22 cents, while the Zacks Consensus Estimate is pegged higher at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ABB has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Altra Industrial Motion Corp. has an Earnings ESP of +5.00% and a Zacks Rank #2.
Parker-Hannifin Corporation (PH - Free Report) has an Earnings ESP of +2.16% and carries a Zacks Rank #2.
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ABB Ltd (ABB) to Report Q1 Earnings: What's in the Cards?
Swiss engineering behemoth ABB Ltd is slated to report first-quarter 2017 results, before the opening bell on Apr 20, 2017.
The company maintained its winning streak in the last quarter with a positive earnings surprise of 22.2%. ABB has consistently beat earnings in the trailing four quarters, with an average positive surprise of 14.3%.
Factors to Consider
ABB’s leading position in key end markets and diligent restructuring efforts are expected to act as major growth drivers for the soon-to-be-reported quarter. Over the past few quarters, investments in power infrastructure upgrades and rising demand for energy efficient products across end markets have boosted ABB’s performance. Positive investments made by all the three major markets of the company, namely, utilities, industry and transport & infrastructure, are expected to boost first quarter financials.
This apart, ABB’s revamped “Next Level Strategy”, which was launched last year and is the company’s blueprint of long-term growth, is expected to act as a major catalyst for first quarter financials. ABB has delivered robust top line growth, operational earnings hike, margin improvement and order improvement leveraging on the benefits of this strategy.
The company is currently in the final stage of the Next Level Strategy after successfully completing the previous two stages, which comprised elaborate business pruning efforts that resulted in the reshuffle of its five segments into four entrepreneurial businesses. Especially, the White-Collar Productivity savings program has garnered significant cost savings over the past few quarters and is expected to benefit first quarter results significantly.
Despite these positives, ABB’s first-quarter results are expected to be marred by prolonged softness in industrial production and economic slowdown in key end markets. For instance, industrial slowdown in China, Canada and the Middle East are likely to thwart sales performance for the soon-to-be-reported first quarter. Moreover, currency translation risks, which have weighed down on the company’s results in the past, are likely to hurt the first-quarter financials as well.
In addition, ABB is also suffering from weak demand in the oil and gas sector. During the fourth-quarter of 2016, orders and revenues in Process Automation were hurt by continued weak demand in process industries, particularly in oil and gas. Lower capital spending for ABB’s key upstream energy end-markets is likely to hurt its financials. We believe precipitous decline of fall in discretionary spending in the upstream oil and gas project are expected to thwart first quarter sales.
Earnings Whispers
Our proven model does not conclusively show that ABB will beat earnings estimates in 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. But that is not the case here as you will see below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -8.33% for ABB as the Most Accurate estimate is pegged at 22 cents, while the Zacks Consensus Estimate is pegged higher at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
ABB Ltd Price and EPS Surprise
ABB Ltd Price and EPS Surprise | ABB Ltd Quote
Zacks Rank: ABB has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Caterpillar Inc. (CAT - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion Corp. has an Earnings ESP of +5.00% and a Zacks Rank #2.
Parker-Hannifin Corporation (PH - Free Report) has an Earnings ESP of +2.16% and carries a Zacks Rank #2.
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If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>