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Machinery Stocks' Earnings to Watch on Jan 24: ITW, SWK, ROK
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In the October-December quarter, the major U.S. stock indexes performed well. While the S&P 500 returned 6.1%, Nasdaq Composite recorded 6.3% growth and NYSE Composite rallied 4.9%. Many industries benefited from healthy operating conditions in the country as well as from the strengthening global economy.
Here we will talk about the machinery industry, broadly grouped under Industrial Products — one of the 16 Zacks sectors. The sector yielded roughly 8.9% return in the quarter, outperforming the S&P 500. It is currently at the top 38%, holding the sixth position among all other sectors.
We believe that domestic requirements and export orders play a key role in determining the demand for industrial machineries in any country. Also, efforts to improve trade relations across nations will be a boon for machinery companies. The U.S. machinery companies will gain from the implementation of $1 trillion investment plan for infrastructure improvement, strengthening housing and new job additions.
Below we briefly discuss the broader sector’s earnings trend in the October-December quarter.
Per the latest Earnings Preview dated Jan 19, 2018, the S&P 500 companies in the sector are anticipated to record year-over-year earnings growth of 22.7% in the quarter compared with 19.6% in the previous quarter. Revenues are likely to increase 11.9% versus 4.8% registered in the previous quarter.
Collectively, the S&P 500 companies are predicted to record earnings and sales growth of 10.3% and 7.1%, respectively. These projections are higher than 6.7% earnings growth and 5.9% sales rise registered in the previous quarter.
What’s in Store for 3 Machinery Stocks, ITW, SWK & ROK in the Quarter?
Below we discuss briefly the expectations from the three machinery stocks slated to report their numbers for October-December quarter on Jan 24:
Illinois Tool Works Inc. (ITW - Free Report) : The company will release results for the fourth quarter and 2017 before the market opens. It recorded better-than-expected results in each of the four trailing quarters, pulling off an average positive earnings surprise of 3.29%.
The company is poised to gain from strengthening business in the Automotive OEM segment on the back of growing acceptance of electric vehicles globally and the company’s penetration in international markets. Also, innovative products with low costs and high safety standards are the keys to success in the Food Equipment segment while rising infrastructure investments, recovering demand in the heavy equipment, onshore oil & gas and general fabrication end markets will benefit the Welding segment.
Stanley Black & Decker, Inc. (SWK - Free Report) : The company is expected to release results for the fourth quarter and 2017 before the market opens. It reported better-than-expected results in each of the last four quarters, with an average positive earnings surprise of 4.26%.
Stanley Black & Decker, Inc. Price and EPS Surprise
We believe that the company will reap benefits from constant innovation of new products and strengthening end markets. The Tools & Storage segment is likely to gain from fortifying construction market in the United States and relatively stable operating conditions in Europe and the emerging markets. Products like DeWalt FlexVolt and acquired assets of Newell Tools and Craftsman will be the primary drivers.
Rockwell Automation Inc. (ROK - Free Report) : The company is expected to release results for the first quarter of fiscal 2018 before the market opens. It reported better-than-expected results in three of the last four quarters while lagging in one. Average earnings surprise was a positive 9.08%.
Our proven model provides some idea about the stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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.
Rockwell Automation currently carries a Zacks Rank #3 and has an Earnings ESP of +0.87%. Strong order activity, improving global economy, growth in industrial productions and restructuring activities will benefit the company. However, incentive compensation, costs related to restructuring activities and higher input costs are headwinds.
Stay tuned! Check back on our full write-up on earnings release of these stocks.
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Machinery Stocks' Earnings to Watch on Jan 24: ITW, SWK, ROK
In the October-December quarter, the major U.S. stock indexes performed well. While the S&P 500 returned 6.1%, Nasdaq Composite recorded 6.3% growth and NYSE Composite rallied 4.9%. Many industries benefited from healthy operating conditions in the country as well as from the strengthening global economy.
Here we will talk about the machinery industry, broadly grouped under Industrial Products — one of the 16 Zacks sectors. The sector yielded roughly 8.9% return in the quarter, outperforming the S&P 500. It is currently at the top 38%, holding the sixth position among all other sectors.
We believe that domestic requirements and export orders play a key role in determining the demand for industrial machineries in any country. Also, efforts to improve trade relations across nations will be a boon for machinery companies. The U.S. machinery companies will gain from the implementation of $1 trillion investment plan for infrastructure improvement, strengthening housing and new job additions.
Below we briefly discuss the broader sector’s earnings trend in the October-December quarter.
Per the latest Earnings Preview dated Jan 19, 2018, the S&P 500 companies in the sector are anticipated to record year-over-year earnings growth of 22.7% in the quarter compared with 19.6% in the previous quarter. Revenues are likely to increase 11.9% versus 4.8% registered in the previous quarter.
Collectively, the S&P 500 companies are predicted to record earnings and sales growth of 10.3% and 7.1%, respectively. These projections are higher than 6.7% earnings growth and 5.9% sales rise registered in the previous quarter.
What’s in Store for 3 Machinery Stocks, ITW, SWK & ROK in the Quarter?
Below we discuss briefly the expectations from the three machinery stocks slated to report their numbers for October-December quarter on Jan 24:
Illinois Tool Works Inc. (ITW - Free Report) : The company will release results for the fourth quarter and 2017 before the market opens. It recorded better-than-expected results in each of the four trailing quarters, pulling off an average positive earnings surprise of 3.29%.
Illinois Tool Works Inc. Price and EPS Surprise
Illinois Tool Works Inc. Price and EPS Surprise | Illinois Tool Works Inc. Quote
The company is poised to gain from strengthening business in the Automotive OEM segment on the back of growing acceptance of electric vehicles globally and the company’s penetration in international markets. Also, innovative products with low costs and high safety standards are the keys to success in the Food Equipment segment while rising infrastructure investments, recovering demand in the heavy equipment, onshore oil & gas and general fabrication end markets will benefit the Welding segment.
Over the last 60 days, the Zacks Consensus Estimate for the fourth quarter remained stable at $1.62. (For more please read: Illinois Tool Likely to Beat Q4 Earnings: Here’s Why)
Stanley Black & Decker, Inc. (SWK - Free Report) : The company is expected to release results for the fourth quarter and 2017 before the market opens. It reported better-than-expected results in each of the last four quarters, with an average positive earnings surprise of 4.26%.
Stanley Black & Decker, Inc. Price and EPS Surprise
Stanley Black & Decker, Inc. Price and EPS Surprise | Stanley Black & Decker, Inc. Quote
We believe that the company will reap benefits from constant innovation of new products and strengthening end markets. The Tools & Storage segment is likely to gain from fortifying construction market in the United States and relatively stable operating conditions in Europe and the emerging markets. Products like DeWalt FlexVolt and acquired assets of Newell Tools and Craftsman will be the primary drivers.
Over the last 60 days, the Zacks Consensus Estimate for the stock remained stable at $2.14. (For more please read: Stanley Black & Decker Q4 Earnings: A Beat in Store?)
Rockwell Automation Inc. (ROK - Free Report) : The company is expected to release results for the first quarter of fiscal 2018 before the market opens. It reported better-than-expected results in three of the last four quarters while lagging in one. Average earnings surprise was a positive 9.08%.
Rockwell Automation, Inc. Price and EPS Surprise
Rockwell Automation, Inc. Price and EPS Surprise | Rockwell Automation, Inc. Quote
Our proven model provides some idea about the stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
Rockwell Automation currently carries a Zacks Rank #3 and has an Earnings ESP of +0.87%. Strong order activity, improving global economy, growth in industrial productions and restructuring activities will benefit the company. However, incentive compensation, costs related to restructuring activities and higher input costs are headwinds.
Over the last 60 days, the Zacks Consensus Estimate for the stock remained stable at $1.74. (For more please read: What's in Store for Rockwell Automation Q1 Earnings?)
Stay tuned! Check back on our full write-up on earnings release of these stocks.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>