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5 Industrial Products Stocks to Report Earnings Surprise in Q3
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The third-quarter results are expected to be better than the second quarter of 2020 — evident from an expected earnings decline of 18.9% for the S&P 500, whereas it recorded a fall of 32.3% in the second quarter. Companies across multiple sectors — especially autos, construction and finance — are believed to have shown resiliency to the hardship caused by the COVID-19 outbreak.
Notably, among the 16 Zacks sectors, two sectors are predicted to report year-over-year earnings growth in the third quarter of 2020. Also, ten sectors are expected to report sequentially lower earnings declines for the quarter. Our topic of discussion is the Zacks Industrial Products sector.
Per Earnings Preview report dated Oct 16, earnings of the sector are expected to decline 24.4% year over year in the quarter, suggesting an improvement from a 35.2% fall recorded in the previous quarter. Revenues are predicted to decrease 6.7% (whereas it reported a 15.3% decline in the second quarter) and margin is anticipated to decline 2.2%.
Let us discuss the factors that might have played a key role in shaping the results for industrial stocks.
Factors at Play
We believe that the operating environment for industrial companies was quite favorable in the third quarter of 2020 than in the previous quarter. Metrics like industrial production and ISM Purchasing Managers' Index (“PMI”) gained momentum in the quarter.
The United States’ industrial production increased 39.8% year over year in the third quarter — with manufacturing output rising 53.7%. This compares favorably with a decline of 42.6% in industrial production in the second quarter. In addition, ISM Purchasing Managers' Index was at 55.4% in September as compared with 52.6% in June 2020.
Also, the industrial companies are expected to have benefitted from a healthy business through the e-commerce platform. The demand for products related to do-it-yourself applications, personal safety and health, and robotic cleaning is anticipated to have been advantageous for a few companies. Notably, multiple promotional efforts, the focus on innovation and cost-saving actions by the companies as well as the government’s efforts on development are expected to have aided too.
On the flip side, the lingering impact of the pandemic-led challenges on the quarter’s results cannot be completely ignored. Also, forex woes, problems with high debts and competitive pressures are expected to have adversely impacted in the quarter.
5 Stocks Poised for Earnings Beat This Season
Investors looking for options in the sector can select stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. The combination of a favorable ranking and positive ESP points toward stocks with a high probability of surpassing estimates in the quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Below we have listed five industrial stocks, with the right combination of elements to post an earnings beat in the third quarter:
Stanley Black & Decker, Inc. (SWK - Free Report) : The company engages in the manufacturing and distribution of tools (power and hand tools) and related accessories, electronic security solutions, healthcare solutions, engineered fastening systems, and many more items and services. Its market capitalization is currently $28.2 billion.
The company presently sports a Zacks Rank #1 and has an Earnings ESP of +3.46%. The Zacks Consensus Estimate for the quarter has been raised by 22.8% to $2.64 in the past 60 days.
Stanley Black Decker, Inc. Price, Consensus and EPS Surprise
Stanley Black will release results on Oct 27, before market open.
Allegion plc (ALLE - Free Report) : The company is a global provider of security products and solutions for business and domestic purposes. Currently, it has a market capitalization of $9.7 billion.
The company presently carries a Zacks Rank #2 and has an Earnings ESP of +2.51%. The Zacks Consensus Estimate for quarterly earnings has been raised by 3.4% to $1.20 in the past 60 days.
Allegion will release results on Oct 22, before market open.
AGCO Corporation (AGCO - Free Report) : The company, with a market capitalization of $6.1 billion, deals with agricultural equipment and related replacement parts.
It currently sports a Zacks Rank #1 and has an Earnings ESP of +6.07%. The Zacks Consensus Estimate for third-quarter earnings has been raised by 8.5% to $1.02 in the past 60 days.
AGCO Corporation Price, Consensus and EPS Surprise
AGCO will release results on Nov 3, before market open.
Regal Beloit Corporation (RBC - Free Report) : The company, with a market capitalization of $4.1 billion, is engaged in manufacturing electrical and mechanical motion control products.
It currently has a Zacks Rank #2 and an Earnings ESP of +3.24%. The Zacks Consensus Estimate for quarterly earnings has been raised by 3.33% to $1.24 in the past 60 days.
Regal Beloit Corporation Price, Consensus and EPS Surprise
Regal Beloit will release its results on Oct 28, after market close.
Altra Industrial Motion Corp. : The company, with a market capitalization of $2.6 billion, manufactures and provides various motion control, electromechanical power transmission and automation products.
It currently has a Zacks Rank #2 and an Earnings ESP of +2.04%. The Zacks Consensus Estimate for quarterly earnings has been raised by 6.5% to 49 cents in the past 60 days.
Altra Industrial Motion Corp. Price, Consensus and EPS Surprise
Altra Industrial will release results on Oct 23, before market open.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
5 Industrial Products Stocks to Report Earnings Surprise in Q3
The third-quarter results are expected to be better than the second quarter of 2020 — evident from an expected earnings decline of 18.9% for the S&P 500, whereas it recorded a fall of 32.3% in the second quarter. Companies across multiple sectors — especially autos, construction and finance — are believed to have shown resiliency to the hardship caused by the COVID-19 outbreak.
Notably, among the 16 Zacks sectors, two sectors are predicted to report year-over-year earnings growth in the third quarter of 2020. Also, ten sectors are expected to report sequentially lower earnings declines for the quarter. Our topic of discussion is the Zacks Industrial Products sector.
Per Earnings Preview report dated Oct 16, earnings of the sector are expected to decline 24.4% year over year in the quarter, suggesting an improvement from a 35.2% fall recorded in the previous quarter. Revenues are predicted to decrease 6.7% (whereas it reported a 15.3% decline in the second quarter) and margin is anticipated to decline 2.2%.
Let us discuss the factors that might have played a key role in shaping the results for industrial stocks.
Factors at Play
We believe that the operating environment for industrial companies was quite favorable in the third quarter of 2020 than in the previous quarter. Metrics like industrial production and ISM Purchasing Managers' Index (“PMI”) gained momentum in the quarter.
The United States’ industrial production increased 39.8% year over year in the third quarter — with manufacturing output rising 53.7%. This compares favorably with a decline of 42.6% in industrial production in the second quarter. In addition, ISM Purchasing Managers' Index was at 55.4% in September as compared with 52.6% in June 2020.
Also, the industrial companies are expected to have benefitted from a healthy business through the e-commerce platform. The demand for products related to do-it-yourself applications, personal safety and health, and robotic cleaning is anticipated to have been advantageous for a few companies. Notably, multiple promotional efforts, the focus on innovation and cost-saving actions by the companies as well as the government’s efforts on development are expected to have aided too.
On the flip side, the lingering impact of the pandemic-led challenges on the quarter’s results cannot be completely ignored. Also, forex woes, problems with high debts and competitive pressures are expected to have adversely impacted in the quarter.
5 Stocks Poised for Earnings Beat This Season
Investors looking for options in the sector can select stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. The combination of a favorable ranking and positive ESP points toward stocks with a high probability of surpassing estimates in the quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Below we have listed five industrial stocks, with the right combination of elements to post an earnings beat in the third quarter:
Stanley Black & Decker, Inc. (SWK - Free Report) : The company engages in the manufacturing and distribution of tools (power and hand tools) and related accessories, electronic security solutions, healthcare solutions, engineered fastening systems, and many more items and services. Its market capitalization is currently $28.2 billion.
The company presently sports a Zacks Rank #1 and has an Earnings ESP of +3.46%. The Zacks Consensus Estimate for the quarter has been raised by 22.8% to $2.64 in the past 60 days.
Stanley Black Decker, Inc. Price, Consensus and EPS Surprise
Stanley Black Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black Decker, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stanley Black will release results on Oct 27, before market open.
Allegion plc (ALLE - Free Report) : The company is a global provider of security products and solutions for business and domestic purposes. Currently, it has a market capitalization of $9.7 billion.
The company presently carries a Zacks Rank #2 and has an Earnings ESP of +2.51%. The Zacks Consensus Estimate for quarterly earnings has been raised by 3.4% to $1.20 in the past 60 days.
Allegion PLC Price, Consensus and EPS Surprise
Allegion PLC price-consensus-eps-surprise-chart | Allegion PLC Quote
Allegion will release results on Oct 22, before market open.
AGCO Corporation (AGCO - Free Report) : The company, with a market capitalization of $6.1 billion, deals with agricultural equipment and related replacement parts.
It currently sports a Zacks Rank #1 and has an Earnings ESP of +6.07%. The Zacks Consensus Estimate for third-quarter earnings has been raised by 8.5% to $1.02 in the past 60 days.
AGCO Corporation Price, Consensus and EPS Surprise
AGCO Corporation price-consensus-eps-surprise-chart | AGCO Corporation Quote
AGCO will release results on Nov 3, before market open.
Regal Beloit Corporation (RBC - Free Report) : The company, with a market capitalization of $4.1 billion, is engaged in manufacturing electrical and mechanical motion control products.
It currently has a Zacks Rank #2 and an Earnings ESP of +3.24%. The Zacks Consensus Estimate for quarterly earnings has been raised by 3.33% to $1.24 in the past 60 days.
Regal Beloit Corporation Price, Consensus and EPS Surprise
Regal Beloit Corporation price-consensus-eps-surprise-chart | Regal Beloit Corporation Quote
Regal Beloit will release its results on Oct 28, after market close.
Altra Industrial Motion Corp. : The company, with a market capitalization of $2.6 billion, manufactures and provides various motion control, electromechanical power transmission and automation products.
It currently has a Zacks Rank #2 and an Earnings ESP of +2.04%. The Zacks Consensus Estimate for quarterly earnings has been raised by 6.5% to 49 cents in the past 60 days.
Altra Industrial Motion Corp. Price, Consensus and EPS Surprise
Altra Industrial Motion Corp. price-consensus-eps-surprise-chart | Altra Industrial Motion Corp. Quote
Altra Industrial will release results on Oct 23, before market open.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>