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What's in the Cards for Milacron (MCRN) in Q3 Earnings?

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Milacron Holdings Corp. (MCRN - Free Report) is scheduled to report third-quarter 2017 results on Oct 26, before the opening bell.

Last quarter, Milacron surpassed the Zacks Consensus Estimate by 12.2%. The company beat estimates in three of the trailing four quarters, witnessing an average positive earnings surprise of 10.3%.

Let’s see how things are shaping up for this announcement.

Milacron Holdings Corp. Price and EPS Surprise


Milacron Holdings Corp. Price and EPS Surprise | Milacron Holdings Corp. Quote

Factors to Consider

Milacron recorded orders of $335 million in second-quarter 2017. About 40% of the orders were shipped within the second quarter and 35% were scheduled  in the third quarter. During the second-quarter conference call, the company stated that it has filled about 70% of backlog for Q3. Based on the current-order rates, Milacron remains confident for Q3’s performance.

According to our latest consensus estimates, Milacron is expected to post net sales of $166 million for the third quarter in its Advanced Plastic Processing Technologies (APPT) segment, reflecting a year over year decline of 1.8%. Further, our consensus estimates indicate that net sales of Melt Delivery and Control Systems will reach $105 million in the quarter and the Zacks Consensus Estimate for Fluid Technologies is pegged at $29.6 million.

However, pricing pressure remains a headwind in the APPT segment due to the combination of the competition, low-growth environment in North America, as well as broader commodity deflationary headwinds. The environment remains somewhat sluggish for equipment spending, and consequently, a significant improvement is not expected anytime soon.

In addition, the company is facing competition in its equipment business in North America, along with a choppy industrial environment. Milacron also witnessed $8-million foreign-currency headwind in the top line in the first half of 2017. The company believes foreign-currency impact will likely hurt its performance in the quarter to be reported.

Earnings Whispers

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

Zacks ESP: Milacron has an Earning ESP of +2.38%. This is because the Most Accurate estimate of 43 cents per share comes above the Zacks Consensus Estimate of 42 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Milacron carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Share Price Performance

Milacron has underperformed the industry over the past year. The company’s shares gained around 21.9% compared with 54.0% growth recorded by the industry.


Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Barnes Group Inc. (B - Free Report) with an Earnings ESP of +0.87% and a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

A. O. Smith Corp. (AOS - Free Report) with an Earnings ESP of +0.11% and a Zacks Rank of 2 (Buy).

Caterpillar Inc. (CAT - Free Report) with an Earnings ESP of +1.27% and a Zacks Rank of 2.

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