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Machinery Companies' Earnings Due on Nov 5: PH, MIDD & FLS

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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 - 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.

ParkerHannifin Corporation Price, Consensus and EPS Surprise

 

ParkerHannifin Corporation Price, Consensus and EPS Surprise

ParkerHannifin Corporation price-consensus-eps-surprise-chart | ParkerHannifin Corporation Quote

 

Our proven model conclusively predicts an earnings beat for Parker-Hannifin this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. That is exactly the case with Parker-Hannifin. 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.

Currently, Parker-Hannifin has a Zacks Rank #2 and an Earnings ESP of +5.44%. The company has likely gained from growth-based investments and healthy businesses in refrigeration, military, mining, telecommunication and other markets. However, weakness in oil & gas, construction and other markets due to the pandemic is likely to have affected results. (For further information please read: Parker-Hannifin to Report Q1 Earnings: Beat in Store?)

The Zacks Consensus Estimate for the company’s quarterly earnings has moved up 3.2% to $2.29 per share in the past 60 days.

The Middleby Corporation (MIDD - Free Report) is expected to release third-quarter results tomorrow, before market open. In the last four quarters, the company recorded better-than-expected results. It has a trailing four-quarter earnings surprise of +17.07%, on average.

The Middleby Corporation Price, Consensus and EPS Surprise

 

The Middleby Corporation Price, Consensus and EPS Surprise

The Middleby Corporation price-consensus-eps-surprise-chart | The Middleby Corporation Quote

 

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 - 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.

Flowserve Corporation Price, Consensus and EPS Surprise

 

Flowserve Corporation Price, Consensus and EPS Surprise

Flowserve Corporation price-consensus-eps-surprise-chart | Flowserve Corporation Quote

 

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.

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Flowserve Corporation (FLS) - free report >>

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