For the second quarter, industrial production rose at an annual rate of 4.7%, driven by strong increases in mining and utilities. Month wise, U.S. industrial production logged growth of 0.8% in April compared with March, followed by 0.1% in May and 0.4% in June. This is a marked improvement from the annual rate of 1.5 % in first-quarter 2017. The upbeat numbers from one of the leading economic indicators for the industrial stocks signals improved performance in the second quarter.
Government policies encouraging better trade relations along with increase in infrastructural investments, job creation and high consumer-end demand will support growth. Trump administration’s plan to invest considerably in the country’s infrastructure, if implemented, will boost growth of the industrial sector.
In the past one year, the industrial products sector has clocked a gain of 21.6%, outperforming the S&P 500’s climb of 16.5%. The U.S. factory activity seems to have overcome its previous sluggishness driven by steady job creation, a stable dollar and strong overseas demand.
The industrial products sector (one of the 16 broad Zacks sectors) is thus currently enjoying a Zacks Sector Rank of 2, just a pace behind the Auto, Tires and Trucks sector. This can be attributed to the fact that the majority of the 215 industries within this sector has performed well lately and are poised to take the momentum ahead in the coming quarters.
So far 59.1% of the S&P participants in the Industrial Products sector have reported second-quarter results. These companies have put up a 25.5% growth in earnings in second-quarter 2017. Taking into account all of the companies that are yet to report, the sector is forecasted to log a 17.6% growth in earnings in the second quarter. The Industrial Products sector is one of the five sectors projected to log a double-digit growth in the second quarter. (Read more: Q2 Earnings Season Past the Halfway Mark)
It will be interesting to see how some of the industrial stocks fare when they release June ending quarter numbers on Aug 3. Apart from beats and misses, focus will also be on their outlook.
Leading supplier of metal and plastic packaging to the beverage and food industries, Ball Corporation (BLL - Free Report) is scheduled to report second-quarter fiscal 2017 results before the opening bell. The company registered a year-over-year improvement in both top line and bottom line in the last reported quarter.
In the preceding quarter, the company posted a positive earnings surprise of 11.76%. Ball Corporation has outpaced the Zacks Consensus Estimate in the trailing four quarters, leading to an average positive earnings surprise of 5.61%.
Ball Corporation Price and EPS Surprise
The favorable combination of Berry Global Group’s Zacks Rank #3 and +1.21% ESP makes us reasonably confident of a positive earnings beat this quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
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