As we are at the peak of the Q2 earnings season (or the quarter ended Jun 30, 2016), several companies are scheduled to report their financial results this week. As of Jul 29, 2016, 60% of the S&P members already reported their quarterly earnings.
Per the Zacks Earnings Trends report, this will likely be the fifth consecutive quarter to report earnings decline in spite of the sequential improvement in earnings. Interestingly, this quarter is seeing positive revenue growth and is currently reversing the trend displayed in the preceding quarter. The Q2 earnings season is critical for investors to ascertain the most attractive picks as the market has begun to stabilize after Brexit, which shook the global economy in Jun 2016. Post Brexit, investors have become jittery and are resorting to safe haven stocks.
In this scenario, investing in the home furnishing sector seems to be a good idea. The home furnishing sector has been benefiting from a recent improvement in the construction sector.
Of the construction companies listed in the S&P 500 index, 53.8% have already reported their results. While 57.1% of these companies surpassed earnings estimates, 42.9% beat revenue expectations. Total earnings of these construction companies jumped 14.3% on 11.3% increase in revenues.
The recently released housing data has been fairly upbeat with reports of higher sales of new single-family houses coupled with mid-single-digit growth in housing starts. Further, a strong job data and rising consumer confidence are also doing the trick for these stocks.
In addition to home construction, the home remodeling market is also picking up pace. Improved construction and remodeling activities increase demand for home furnishing products, in turn, boosting growth for these companies.
On Aug 4, three home furnishing companies are scheduled to report their quarterly results. Let us look at how these companies are placed ahead of their releases.
Mohawk Industries, Inc.(MHK - Free Report)
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions. Hence, our proven model does not conclusively show that Mohawk is likely to beat on earnings this quarter. Last quarter, this leading global manufacturer of flooring products posted a positive earnings surprise of 2.15%. Mohawk surpassed estimates in three out of the past four quarters with an average positive surprise of 1.96%.
For Q2, the company expects earnings per share in the range of $3.29 to $3.38, which indicates year-over-year increase of 22–26%. The U.S. residential and remodeling sector is gaining momentum, which should result in strong demand for Mohawk’s products. However, economic slowdown in emerging markets is raises concerns. The slowing economic growth in China may hurt Mohawk as it has a considerable presence in that country. The Zacks Consensus Estimate for the quarter is pegged at $3.36 per share. (Read: Mohawk Industries Q2 Earnings: What's in the Cards?).
Dorel Industries Inc. (DIIBF - Free Report)
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3 (Hold). Though a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increase the predictive power of ESP, a 0.00% Earnings ESP makes surprise prediction inconclusive. Last quarter, this leading global manufacturer of ready-to-assemble furniture, juvenile products and home furnishings had an average negative surprise of 18.87%. The Zacks Consensus Estimate for the quarter is pegged at 47 cents per share.
Libbey Inc.
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3. Hence, our proven model does not conclusively show that Libbey is likely to beat on earnings this quarter. Last quarter, this leading supplier of tabletop products to the foodservice industry posted a positive earnings surprise of 60.00%. Libbey surpassed estimates in all the past four quarters with an average positive surprise of 27.26%. The Zacks Consensus Estimate for the quarter is pegged at 55 cents per share.
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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.
Free: See Our Top Stock and 4 Runners Up >>
As we are at the peak of the Q2 earnings season (or the quarter ended Jun 30, 2016), several companies are scheduled to report their financial results this week. As of Jul 29, 2016, 60% of the S&P members already reported their quarterly earnings.
Per the Zacks Earnings Trends report, this will likely be the fifth consecutive quarter to report earnings decline in spite of the sequential improvement in earnings. Interestingly, this quarter is seeing positive revenue growth and is currently reversing the trend displayed in the preceding quarter. The Q2 earnings season is critical for investors to ascertain the most attractive picks as the market has begun to stabilize after Brexit, which shook the global economy in Jun 2016. Post Brexit, investors have become jittery and are resorting to safe haven stocks.
In this scenario, investing in the home furnishing sector seems to be a good idea. The home furnishing sector has been benefiting from a recent improvement in the construction sector.
Of the construction companies listed in the S&P 500 index, 53.8% have already reported their results. While 57.1% of these companies surpassed earnings estimates, 42.9% beat revenue expectations. Total earnings of these construction companies jumped 14.3% on 11.3% increase in revenues.
The recently released housing data has been fairly upbeat with reports of higher sales of new single-family houses coupled with mid-single-digit growth in housing starts. Further, a strong job data and rising consumer confidence are also doing the trick for these stocks.
In addition to home construction, the home remodeling market is also picking up pace. Improved construction and remodeling activities increase demand for home furnishing products, in turn, boosting growth for these companies.
On Aug 4, three home furnishing companies are scheduled to report their quarterly results. Let us look at how these companies are placed ahead of their releases.
Mohawk Industries, Inc.(MHK - Free Report)
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions. Hence, our proven model does not conclusively show that Mohawk is likely to beat on earnings this quarter. Last quarter, this leading global manufacturer of flooring products posted a positive earnings surprise of 2.15%. Mohawk surpassed estimates in three out of the past four quarters with an average positive surprise of 1.96%.
For Q2, the company expects earnings per share in the range of $3.29 to $3.38, which indicates year-over-year increase of 22–26%. The U.S. residential and remodeling sector is gaining momentum, which should result in strong demand for Mohawk’s products. However, economic slowdown in emerging markets is raises concerns. The slowing economic growth in China may hurt Mohawk as it has a considerable presence in that country. The Zacks Consensus Estimate for the quarter is pegged at $3.36 per share. (Read: Mohawk Industries Q2 Earnings: What's in the Cards?).
Dorel Industries Inc. (DIIBF - Free Report)
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3 (Hold). Though a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increase the predictive power of ESP, a 0.00% Earnings ESP makes surprise prediction inconclusive. Last quarter, this leading global manufacturer of ready-to-assemble furniture, juvenile products and home furnishings had an average negative surprise of 18.87%. The Zacks Consensus Estimate for the quarter is pegged at 47 cents per share.
Libbey Inc.
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3. Hence, our proven model does not conclusively show that Libbey is likely to beat on earnings this quarter. Last quarter, this leading supplier of tabletop products to the foodservice industry posted a positive earnings surprise of 60.00%. Libbey surpassed estimates in all the past four quarters with an average positive surprise of 27.26%. The Zacks Consensus Estimate for the quarter is pegged at 55 cents per share.
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.
Free: See Our Top Stock and 4 Runners Up >>
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