2 Conglomerates' Earnings to Watch on Jul 25: DHR, CR

Zacks Equity Research Published on July 22, 2016

Next week we will see a flurry of reports coming in, as the earnings season will be at its peak. With macroeconomic conditions still soft, earnings growth is projected to be negative for 9 of the 16 Zacks sectors (as of Jul 21). This shows that the weakness is quite broad-based, though the energy sector still remains the biggest drag. Further, growth for the benchmark S&P 500 index is on track to be in the red for the fifth quarter in a row.

Per the latest Zacks Earnings Trend report, out of the 103 S&P 500 members that have reported so far this season, about 68.9% have posted earnings beats and 56.3% surprising top line estimates.

On the whole, the report projects that earnings for S&P 500 companies are now on track to decline 3.6% from the year-ago period, on 0.5% lower revenues. This is comparable to a decline of 6.2% expected a fortnight ago. This change hints toward some tell-tale signs of improvement in the overall earnings picture, which still appears bleak.

The conglomerate sector is one of the few bright spots in the dull picture. The sector is expecting double-digit growth this quarter, with earnings expected to grow 11.3%, though sales are expected to decline 3.7% over the last year.

Reports from this sector will be in full swing in the coming week. Bellwethers like General Electric Company (GE - Free Report) and Honeywell International Inc. (HON - Free Report) have released their earnings already, both having beaten estimates

Early next week, Danaher Corp. (DHR - Free Report) , Crane Co. (CR - Free Report) , 3M Company (MMM - Free Report) , United Technologies Corporation and Carlisle Companies Incorporated (CSL - Free Report) will report results. This will be followed by Federal Signal Corp. (FSS - Free Report) and Hitachi, Ltd. (HTHIY - Free Report) later in the week.

Let’s have a look at how Danaher and Crane Co., that will begin the week, are poised ahead of the scheduled announcements.

Danaher: This global conglomerate designs, manufactures and markets diverse lines of industrial and consumer products. Its sales are derived from an extensive range of professional, medical, industrial, commercial and consumer products.Danaher has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell). The Zacks Consensus Estimate for the quarter is pegged at $1.09.

Danaher recorded a decent surprise history over the trailing four quarters, having beaten estimates thrice and meeting it once, with an average positive surprise of 2.4%. Last quarter, it beat estimates by 4.9%.

However, the company has been plagued by macroeconomic concerns in recent times. Prolonged weakness in industrial markets in China, North America, Latin America and the Middle East has proved to be a formidable headwind for Danaher, and will likely impact this quarter’s results as well. (Read More: Danaher Q2 Earnings: Stock Likely to Disappoint?)

Crane Co.: Crane Co.is a diversified manufacturer of highly engineered industrial products, and caters to a broad range of industries like aerospace, electronics, hydrocarbon processing, petrochemical, chemical, power generation, automated merchandising, transportation and others. The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter is pegged at $1.02.

Crane Co. has had a choppy earnings history in recent times, with earnings beating estimates twice and missing once in the trailing four quarters, registering a modest average positive surprise of 1.3%. Last quarter, it beat estimates by 6.9%.

Crane Co.’s results will likely benefit from good momentum in its Aerospace & Electronics business. However, depressed sales in Fluid Handling, which accounts for a big share of the company’s business, might prove dampening for the company’s top line. Also, adverse foreign currency translation effect remains a formidable headwind for the company.

Keep an eye on our full earnings articles to see how these conglomerates finally fared in the quarter.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.