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What's in the Cards for Owens Corning's (OC) Q3 Earnings?
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Owens Corning (OC - Free Report) is scheduled to report third-quarter fiscal 2018 results on Oct 24, before the market opens.
Notably, the company has a negative earnings surprise of 18.8% for the last reported quarter. The company’s earnings also missed estimates in three of the trailing four quarters, the average negative surprise being 7.1%.
Meanwhile, shares of Owens Corning have declined 36.8% in the past year compared with the industry’s fall of 10.8%. Also, earnings estimates for the yet-to-be-reported quarter and the current fiscal were stable in the past seven days.
Let’s delve into the factors that are expected to have had an impact on the company’s Q3 performance.
Factors At Play
The company continues to strengthen its portfolio through acquisitions. Strong price realization and positive housing market fundamentals are expected to drive the top line.
The Zacks Consensus Estimate for Insulation segment (contributing 37.4% of total second-quarter revenues) revenues is pegged at $752 million, indicating a rise from $568 million in the year-ago quarter as well as from $682 million in the last reported quarter.
The company expects improved growth in single-family versus multi-family to drive residential construction, thereby creating demand for insulating products. Moreover, rising commercial and industrial construction activity, sterner building codes and the growing need for energy efficiency are also likely to fuel demand.
The consensus estimate for the Roofing segment’s (36.1% of total second-quarter revenues) revenues stands at $670 million, reflecting a decline of 1.8% year over year and a rise of 1.7% on a sequential basis. In fact, Owens Corning delivered strong top-line growth in the second quarter of 2018 on acquisitions and robust pricing actions in the Roofing and Insulation businesses.
For the Roofing segment, the company expects growth in both new construction and remodeling markets. However, a mid-single-digit decline in the overall U.S. asphalt shingle market is anticipated in 2018.
Meanwhile, the company’s Composites segment (29.7% of second-quarter sales) revenues are estimated to reach $537 million, reflecting an increase from $514 million in the year-ago quarter and a decline from $541 million in the preceding quarter.
Demand for composites is driven by general global economic activity and increasing replacement of traditional materials such as aluminum, wood and steel with composites that offer lighter weight, improved strength, lack of conductivity and corrosion resistance.
In Composites, the company expects consistent growth in the glass fiber market and expects EBIT to be slightly below the prior-year quarter’s tally in 2018.
Owens Corning Inc Price, Consensus and EPS Surprise
The company is expected to post quarterly earnings of $1.71 in the third quarter of fiscal 2018, which marks an increase of 36.8% from the year-ago quarter. Revenues are estimated at $1.90 billion, reflecting a rise of 11.3% from the year-ago quarter.
What Our Model Indicates
Our proven model does not suggest a beat for Owens Corning in the quarter to be reported. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for that to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: The Earnings ESP for the company is +1.98% as the Most Accurate Estimate is pegged at $1.75 while the Zacks Consensus Estimate is at $1.71. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Owens Corning has a Zacks Rank #4 (Sell), which decreases the predictive power of ESP. Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are some companies in the construction sector, which according to our model also have the right combination of elements to post earnings beat in their quarterly reports:
Rayonier Inc. (RYN - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3. The company is slated to report quarterly numbers on Oct 31.
Jacobs Engineering Group Inc. has an Earnings ESP of +5.25% and a Zacks Rank #3. The company is expected to report quarterly results on Nov 20.
The company is scheduled to report quarterly numbers on Oct 25.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
What's in the Cards for Owens Corning's (OC) Q3 Earnings?
Owens Corning (OC - Free Report) is scheduled to report third-quarter fiscal 2018 results on Oct 24, before the market opens.
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Notably, the company has a negative earnings surprise of 18.8% for the last reported quarter. The company’s earnings also missed estimates in three of the trailing four quarters, the average negative surprise being 7.1%.
Meanwhile, shares of Owens Corning have declined 36.8% in the past year compared with the industry’s fall of 10.8%. Also, earnings estimates for the yet-to-be-reported quarter and the current fiscal were stable in the past seven days.
Let’s delve into the factors that are expected to have had an impact on the company’s Q3 performance.
Factors At Play
The company continues to strengthen its portfolio through acquisitions. Strong price realization and positive housing market fundamentals are expected to drive the top line.
The Zacks Consensus Estimate for Insulation segment (contributing 37.4% of total second-quarter revenues) revenues is pegged at $752 million, indicating a rise from $568 million in the year-ago quarter as well as from $682 million in the last reported quarter.
The company expects improved growth in single-family versus multi-family to drive residential construction, thereby creating demand for insulating products. Moreover, rising commercial and industrial construction activity, sterner building codes and the growing need for energy efficiency are also likely to fuel demand.
The consensus estimate for the Roofing segment’s (36.1% of total second-quarter revenues) revenues stands at $670 million, reflecting a decline of 1.8% year over year and a rise of 1.7% on a sequential basis. In fact, Owens Corning delivered strong top-line growth in the second quarter of 2018 on acquisitions and robust pricing actions in the Roofing and Insulation businesses.
For the Roofing segment, the company expects growth in both new construction and remodeling markets. However, a mid-single-digit decline in the overall U.S. asphalt shingle market is anticipated in 2018.
Meanwhile, the company’s Composites segment (29.7% of second-quarter sales) revenues are estimated to reach $537 million, reflecting an increase from $514 million in the year-ago quarter and a decline from $541 million in the preceding quarter.
Demand for composites is driven by general global economic activity and increasing replacement of traditional materials such as aluminum, wood and steel with composites that offer lighter weight, improved strength, lack of conductivity and corrosion resistance.
In Composites, the company expects consistent growth in the glass fiber market and expects EBIT to be slightly below the prior-year quarter’s tally in 2018.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc Price, Consensus and EPS Surprise | Owens Corning Inc Quote
What Do the Estimates Say?
The company is expected to post quarterly earnings of $1.71 in the third quarter of fiscal 2018, which marks an increase of 36.8% from the year-ago quarter. Revenues are estimated at $1.90 billion, reflecting a rise of 11.3% from the year-ago quarter.
What Our Model Indicates
Our proven model does not suggest a beat for Owens Corning in the quarter to be reported. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for that to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: The Earnings ESP for the company is +1.98% as the Most Accurate Estimate is pegged at $1.75 while the Zacks Consensus Estimate is at $1.71. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Owens Corning has a Zacks Rank #4 (Sell), which decreases the predictive power of ESP. Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
Here are some companies in the construction sector, which according to our model also have the right combination of elements to post earnings beat in their quarterly reports:
Rayonier Inc. (RYN - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3. The company is slated to report quarterly numbers on Oct 31.
Jacobs Engineering Group Inc. has an Earnings ESP of +5.25% and a Zacks Rank #3. The company is expected to report quarterly results on Nov 20.
Watsco, Inc. (WSO - Free Report) has an Earnings ESP of +1.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to report quarterly numbers on Oct 25.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>