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Encore Wire (WIRE) to Post Q3 Earnings: What's in the Cards?

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Encore Wire Corporation (WIRE - Free Report) is scheduled to report third-quarter 2021 results on Oct 26, after market close.

The company delivered an earnings surprise of 230.05%, on average, in the trailing four quarters, beating estimates on all occasions. Encore Wire’s second-quarter 2021 adjusted earnings of $8.82 per share surpassed the Zacks Consensus Estimate of $1.14 by 673.68%.

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In the past three months, shares of the company have surged 62.5% compared with the industry’s growth of 33.1%.

Key Factors

Encore Wire is expected to have benefited from strong demand for electrical building wire across its commercial and industrial end markets in the third quarter. An increase in shipment volume for copper and aluminum wire on strong production and higher prices is likely to have augmented the company’s top-line performance. Also, strength in the residential end market backed by solid construction activities is likely to have boosted its performance.

The company’s investments in product innovation and manufacturing capacity along with its strong backlog level are likely to have been beneficial. Its vertically integrated business model coupled with its focus on operational execution, cost-control measures, and effective pricing actions might also have supported its margins and profitability in the to-be-reported quarter.

Despite Encore Wire’s strong raw material supplier relationships, challenges related to the supply of raw materials and disruptions in the distribution network are likely to have dragged its performance. Higher raw material prices and shortage of skilled labor might also have affected the company’s margins and profitability in the quarter.

High capital expenditures incurred might have been a spoilsport. It expects to incur $91.2-$111.2 million in the second half of 2021. This is likely to have adversely impacted its earnings in the to-be-reported quarter.

The consensus estimate for the company’s third-quarter earnings is pegged at $2.82 suggesting a decline of 68% sequentially but an improvement of 176.5% from the year-ago reported number.

Encore Wire Corporation Price and EPS Surprise

Encore Wire Corporation Price and EPS Surprise

Encore Wire Corporation price-eps-surprise | Encore Wire Corporation Quote

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate is pegged at $2.82.

Zacks Rank: Encore Wire carries a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider from the Zacks Industrial Products sector as our model shows that these have the right combination of elements to deliver an earnings beat this season:

Deere & Company (DE - Free Report) has an Earnings ESP of +5.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Columbus McKinnon Corporation (CMCO - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank of 2, at present.

Plug Power, Inc. (PLUG - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank 3.