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MMM, DHR Q4 Earnings on Jan 29: Here are the Key Predictions
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Per the latest Earnings Preview, the Conglomerates sector's earnings are expected to fall 7.5% while sales are projected to increase 2.8% (as on Jan 25). Although many conglomerates are gaining from improved demand across various end-markets served and others, prevalent problems — both on macro and micro levels — have fogged up near-term prospects of the industry.
As a matter of fact, profitability of several multi-sector companies is at stake on account of several headwinds, including trade war between the United States and China, tightened workforce market as well as the ongoing truck industry issues.
Notably, the ISM index for national factory activity in December 2018 came in at 54.1, comparatively lower than 59.3 recorded in November. Although a reading of above 50 suggests that the sector is expanding, tariffs imposed by the U.S. administration on steel and aluminum, and against Chinese imported products in fields of aerospace and machinery are expected to hurt business confidence domestically as well as internationally.
As a matter of fact, the ongoing tariff issues, which has impacted major U.S. industrials over the past few months, have clearly been weighing on investors’ minds. On an average, the Conglomerates space has declined 11.7% over the past six months.
We also believe that a tight labor market conditions in the United States might continue to augment the labor cost of these multi-sector behemoths. This are likely to weigh on the companies’ margins in the sector.
Let’s take a sneak peek at two major Conglomerate stocks scheduled to report fourth-quarter 2018 earnings on Jan 29 and see how things are shaping up for the upcoming results.
3M Company (MMM - Free Report) is scheduled to report results before the opening bell. The company is likely to report higher industrial segment profit in the quarter backed by strong automotive solutions, industrial adhesives as well as its Advanced Materials businesses. The Zacks Consensus Estimate for fourth-quarter revenues from 3M’s Industrial segment is pegged at $2,987 million. The company reported revenues of $2,718 million in the year-ago quarter.
However, rising cost of sales has been a major cause of concern for the company over the past few quarters. Notably, high retirement benefit cost, interest expenses and inflation in the prices of major inputs primarily resulted in the rise. The company perceives that material inflation will linger in the fourth quarter of 2018. (Read more:Can Weak Organic Sales & Cost Woes Hurt 3M's Q4 Earnings?)
For the fourth quarter, the company’s earnings are expected to improve 8.1% year over year while its revenues are likely to drop 0.7%. Earnings ESP, (the difference between the Most Accurate Estimate and the Zacks Consensus Estimate) is -1.84%. The Most Accurate Estimate is pegged at $2.23 and the Zacks Consensus Estimate at $2.27.
Negative ESP combined with a Zacks Rank #3 (Hold), makes an earnings surprise prediction difficult for the stock. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Danaher Corporation (DHR - Free Report) is also scheduled to report results before the opening bell. In the quarter, the company’s earnings are expected to rise 6.7% year over year on 4.6% higher revenues. Strong end markets in life science, research and industrial applications should supplement the segment’s sales performance.
The Zacks Consensus Estimate for Life Sciences segment’s revenues is pegged at $1,746 million, reflecting growth of 7.4% year over year. Further, Environmental & Applied Solutions segment’s revenues are likely to come in at $1,120 million. It reported revenues of $1,078 million in the year-ago quarter.
Our proven model does not conclusively show an earnings beat for Danaher in the to-be-reported quarter. Earnings ESP for the company is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate currently pegged at $1.27. Notably, Danaher has a Zacks Rank #3. (Read More: Can Danaher Maintain its Beat Streak in Q4 Earnings?).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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MMM, DHR Q4 Earnings on Jan 29: Here are the Key Predictions
Per the latest Earnings Preview, the Conglomerates sector's earnings are expected to fall 7.5% while sales are projected to increase 2.8% (as on Jan 25). Although many conglomerates are gaining from improved demand across various end-markets served and others, prevalent problems — both on macro and micro levels — have fogged up near-term prospects of the industry.
As a matter of fact, profitability of several multi-sector companies is at stake on account of several headwinds, including trade war between the United States and China, tightened workforce market as well as the ongoing truck industry issues.
Notably, the ISM index for national factory activity in December 2018 came in at 54.1, comparatively lower than 59.3 recorded in November. Although a reading of above 50 suggests that the sector is expanding, tariffs imposed by the U.S. administration on steel and aluminum, and against Chinese imported products in fields of aerospace and machinery are expected to hurt business confidence domestically as well as internationally.
As a matter of fact, the ongoing tariff issues, which has impacted major U.S. industrials over the past few months, have clearly been weighing on investors’ minds. On an average, the Conglomerates space has declined 11.7% over the past six months.
We also believe that a tight labor market conditions in the United States might continue to augment the labor cost of these multi-sector behemoths. This are likely to weigh on the companies’ margins in the sector.
Let’s take a sneak peek at two major Conglomerate stocks scheduled to report fourth-quarter 2018 earnings on Jan 29 and see how things are shaping up for the upcoming results.
3M Company (MMM - Free Report) is scheduled to report results before the opening bell. The company is likely to report higher industrial segment profit in the quarter backed by strong automotive solutions, industrial adhesives as well as its Advanced Materials businesses. The Zacks Consensus Estimate for fourth-quarter revenues from 3M’s Industrial segment is pegged at $2,987 million. The company reported revenues of $2,718 million in the year-ago quarter.
However, rising cost of sales has been a major cause of concern for the company over the past few quarters. Notably, high retirement benefit cost, interest expenses and inflation in the prices of major inputs primarily resulted in the rise. The company perceives that material inflation will linger in the fourth quarter of 2018. (Read more:Can Weak Organic Sales & Cost Woes Hurt 3M's Q4 Earnings?)
For the fourth quarter, the company’s earnings are expected to improve 8.1% year over year while its revenues are likely to drop 0.7%. Earnings ESP, (the difference between the Most Accurate Estimate and the Zacks Consensus Estimate) is -1.84%. The Most Accurate Estimate is pegged at $2.23 and the Zacks Consensus Estimate at $2.27.
3M Company Price and EPS Surprise
3M Company Price and EPS Surprise | 3M Company Quote
Negative ESP combined with a Zacks Rank #3 (Hold), makes an earnings surprise prediction difficult for the stock. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat estimates. 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.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Danaher Corporation (DHR - Free Report) is also scheduled to report results before the opening bell. In the quarter, the company’s earnings are expected to rise 6.7% year over year on 4.6% higher revenues. Strong end markets in life science, research and industrial applications should supplement the segment’s sales performance.
The Zacks Consensus Estimate for Life Sciences segment’s revenues is pegged at $1,746 million, reflecting growth of 7.4% year over year. Further, Environmental & Applied Solutions segment’s revenues are likely to come in at $1,120 million. It reported revenues of $1,078 million in the year-ago quarter.
Danaher Corporation Price and EPS Surprise
Danaher Corporation Price and EPS Surprise | Danaher Corporation Quote
Our proven model does not conclusively show an earnings beat for Danaher in the to-be-reported quarter. Earnings ESP for the company is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate currently pegged at $1.27. Notably, Danaher has a Zacks Rank #3. (Read More: Can Danaher Maintain its Beat Streak in Q4 Earnings?).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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