Machinery companies’ corporate results for the July-September quarter of 2020 so far show resiliency against the adversities caused by the coronavirus pandemic in the last two quarters. It is worth mentioning here that, machinery stocks are grouped under the Zacks
Industrial Products sector. Per the latest Earnings Trends report, nearly 48.3% of S&P 500 companies within the Industrial Products sector have reported results till Oct 28. Earnings for these companies have declined 16.6% year over year, while revenues are down 9.3%. Earnings beat is at 100% and sales beat is at 92.9%. The results reflect the impact of the pandemic and efforts undertaken by the companies to overcome those hurdles. For the July-September quarter, earnings for Industrial Products sector are predicted to decline 18% year over year, while revenues and margins are expected to fall 5.2% and 1.6%, respectively. These estimates suggest improvement over the 35.2% earnings decline, 15.2% fall in revenues and 2.7% decline in margins recorded in the April-June quarter of 2020. Key Factors for Machinery Stocks
In the July-September quarter of 2020, operating environment for machinery companies — as suggested by healthy industrial production and ISM Purchasing Manager’s Index (“PMI”) data — marked an improvement over the previous quarter. Notably, year-over-year growth of 39.8% was recorded for the United Sates’ industrial production in the July-September quarter versus a 42.6% decline in the previous quarter. Meanwhile, the ISM PMI improved from 52.6% in June to 55.4% in September.
Gains from this might get reflected in the results of machinery companies. In addition, the surge in business through the e-commerce platform (especially when retailing is subdued due to the pandemic scare) is likely to have played an important role in the quarter under review. Further, companies dealing in health and safety-related products as well as in do-it-yourself products and robotic cleaners might have seen healthy demand. Also, investments in innovation and promotional programs as well as focus on cost reductions are expected to have aided performances. However, the impacts of the challenges related to the pandemic as well as threats from strong competition and highly-leveraged balance sheets might have played spoilsport. Stocks Due for Earnings Release on Nov 5
Below, we briefly discussed what we expect from the three machinery stocks in the July-September quarter of 2020.
Parker-Hannifin Corporation ( PH Quick Quote PH - Free Report) will release first-quarter fiscal 2021 (ended September 2020) results, before market open. It delivered better-than-expected results in the last four quarters. The company has a trailing four-quarter earnings surprise of 29.54%, on average.
Presently, the company has a Zacks Rank #3 and an Earnings ESP of +7.84%. The company is likely to have gained from solid product offerings, supply chain and cost-saving actions as well as acquired assets. However, the pandemic-related woes and risks from high debts might have hurt performance.
In the past 60 days, the Zacks Consensus Estimate for its quarterly earnings has risen 6.3% to $1.02 per share. Flowserve Corporation ( FLS Quick Quote FLS - Free Report) will report results for the third quarter, after market close. It recorded better-than-expected results in three of the last four quarters and lagged estimates in one. The company has a trailing four-quarter earnings surprise of +10.22%, on average.
Presently, the company has a Zacks Rank #2 and an Earnings ESP of +2.56%. Solid liquidity and backlog as well as cost-saving actions might have aided results. Headwinds from the pandemic are persistent concerns. (For further information please read:
Flowserve to Report Q3 Earnings: Beat in the Cards?) In the past 60 days, the Zacks Consensus Estimate for the quarter earnings was stable at 44 cents per share. Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan. The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain. Click Here, See It Free >>