The prevalent uncertainties in the global arena have been impacting the industrial stocks over the last few quarters. Weak commodity prices and low demand in the energy sector are major concerns. Also, weak economic conditions in some developed and developing nations, the U.K’s decision to exit the European Union, and unfavorable foreign currency movements have influenced international trades.
Below we briefly discuss Industrial sectors’ earnings trend so far in the third-quarter 2016.
As of Oct 14, roughly 4.3% of Industrial stocks in the S&P 500 Group reported their results, recording 16% increase in earnings and 7.9% growth in revenue. Considering the results of all Industrial stocks in the S&P 500 Group, earnings for the sector are predicted to increase 3.4%, while revenue will decline 0.5%.
What’s in Store for 2 Industrial Stocks, ITW, SON for Third-Quarter 2016?
Below we discuss briefly the expectations from the upcoming results of two industrial stocks:
Illinois Tool Works Inc. (ITW - Analyst Report) : The industrial products and equipment manufacturer is slated to release its results on Oct 19, before the market opens. The company recorded better-than-expected results in the four trailing quarters, with an average positive earnings surprise of 2.63%.
Our proven model conclusively shows that Illinois Tool Works will disappoint earnings this quarter as it currently carries a Zacks Rank #4 (Sell) and a -0.67% Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate). For a possible earnings beat, the company should have the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Over the last 60 days, the Zacks Consensus Estimate for Illinois Tool Works has remained stable at $1.49 per share for the quarter. (For more please read: Illinois Tool Works Q3 Earnings: Will it Disappoint?)
Sonoco Products Co. (SON - Analyst Report) : The company is slated to release its results on Oct 20, before the market opens. The company’s results were better-than-expected in three of four trailing quarters, with an average positive earnings surprise of 3.57%.
Our proven model does not conclusively show that Sonoco Products will beat earnings this quarter because it currently carries a Zacks Rank #4 and a 0.00% Earnings ESP. Over the last 60 days, the Zacks Consensus Estimate for the stock has remained stable at 68 cents per share.
Stay tuned! Check back on our full write-up on earnings release of Illinois Tool Works Inc. and Sonoco Products Co.
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