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Ingersoll (IR) to Post Q2 Earnings: Another Beat in Store?

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Ingersoll-Rand Plc (IR - Free Report) is scheduled to report second-quarter 2018 results on Jul 25, before the market opens.

The company pulled off an average positive earnings surprise of 3.91%, over the last four quarters. Notably, in the last reported quarter, Ingersoll-Rand’s earnings of 70 cents per share surpassed the Zacks Consensus Estimate by 12.9%. The Estimate for the to-be-reported quarter is pegged at $1.72. The stock carries a favorable Zacks Rank #2 (Buy), at present.

Let us see how things are shaping up for the company prior to this announcement.

Factors to Influence Q2 Results

Ingersoll anticipates that recovering industrial end-market conditions and healthy climate business will continue to drive its revenues in the quarters ahead. Stronger performance of the commercial and residential HVAC businesses, improving rental business and sturdier Compression Technology services demand are expected to bolster the segmental sales, going forward. Additionally, the company’s ongoing direct sales strategy will likely continue to strengthen sales from Chinese end-markets. Benefits secured from the U.S. Tax Cuts and Jobs Act, regulatory reforms and tight shipping capacity are anticipated to fuel the top-line performance of Ingersoll’s North American Trailer business.

Moreover, favorable foreign currency-translation impact and acquisition benefits will likely drive the company’s near-term revenues.

The Zacks Consensus Estimate for second-quarter revenues of Ingersoll’s Industrial Technologies and Climate Solutions segment are currently pegged at $832 million and $3,371 million, respectively, higher than the corresponding tallies of $765 million and $3,144 million recorded in the year-ago quarter.  

Stellar top-line growth, pricing actions and improved productivity are projected to be conducive to Ingersoll’s near-term performance. However, inflationary headwinds remain major causes of concern. Material cost inflation across tier 1 and tier 2 markets might weigh over the company’s margins in the quarters ahead. Also, escalating freight charges and investments over high ROI projects will likely keep hurting the company’s profitability, moving ahead.

Nevertheless, the Zacks Consensus Estimates for the second-quarter adjusted operating income of Ingersoll’s Industrial Technologies and Climate Solutions segment are currently pegged at $108 million and $559 million, respectively, higher than the corresponding tallies of $96 million and $529 million recorded in the year-ago quarter.  

Stocks to Consider

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 or at least 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.

However, 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 revision momentum.

Here are some companies in the Zacks Industrial sector that you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Atkore International Group Inc. (ATKR - Free Report) , with an Earnings ESP of +1.49% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Graco Inc. (GGG - Free Report) , with an Earnings ESP of +4.00% and a Zacks Rank #1.

Eaton Corporation plc (ETN - Free Report) , with an Earnings ESP of +0.67% and a Zacks Rank #2.

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