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Will Actuant (ATU) Miss Q3 Earnings?

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Machinery company Actuant Corporation (ATU - Free Report) is set to report fiscal third-quarter 2014 (ended May 31, 2014) results on Jun 18, before the opening bell. It delivered 6.25% negative earnings surprise in the preceding quarter. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

In the second quarter of fiscal 2014, Actuant posted mixed results. Earnings decreased 14% year over year to 30 cents per share despite a 9% increase in revenues.

Actuant has lately been witnessing revenue growth on the back of acquisitions. Viking SeaTech, acquired by the company in Aug 2013, has been contributing immensely since then. Recently, Actuant completed the acquisition of Hayes Industries for a sum of roughly $31 million. Moreover, the company has been experiencing a rise in organic sales, expected to grow further in the coming quarter.

For third-quarter fiscal 2014, Actuant anticipates revenues in the range of $370.0 to $380.0 million. Earnings per share are expected in the range of 60 to 65 cents. For fiscal 2014, Actuant expects earnings per share to lie at the lower end of its previous guidance range of $2.00 to $2.10. Core sales are expected to grow 3–5% over fiscal 2013 and free cash flow is presupposed at $190 million.

Earnings Whispers?

Our proven model does not conclusively show that Actuant is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP and a Zacks Rank of #1, #2 or #3 for this to happen. That is not the case here as we will see below.

Zacks Earnings ESP:  The Most Accurate estimate stands at 62 cents flat with the Zacks Consensus Estimate. This translates to Earnings ESP of 0.00%.

Zacks Rank: Actuant’s Zacks Rank #4 (Sell), when combined with a 0.00% Earnings ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Other Stocks to Consider

Here are other companies having the right combination of elements to post an earnings beat this quarter:

The Manitowoc Company, Inc. (MTW - Free Report) , Earnings ESP of +20.00% and a Zacks Rank #3 (Hold).

Lindsay Corporation (LNN - Free Report) , Earnings ESP of +0.72% and a Zacks Rank #3.

Kennametal Inc. (KMT - Free Report) , Earnings ESP of +1.11% and a Zacks Rank #3.

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