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Industrial Stock Earnings Roster for Feb 7: BLL, CCK & BERY

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We are in the thick of the fourth-quarter earnings season with 251 index members having released their quarterly numbers. The picture so far is encouraging with the companies coming up with 16% earnings growth and 10.5% rise in revenues. The proportion of companies beating both the metrics is also a sound 64.9%.
 
Overall earnings in the quarter are expected to rise 13% on 7.7% higher revenues — a marked improvement over 6.7% earnings growth and 5.9% revenue rise recorded in the preceding quarter. The industrial products sector (one of the 16 broad Zacks sectors) is one among the Zacks sectors that is expected to rake in the strongest gains this earnings season. Per the latest projections, fourth-quarter earnings for the sector will climb 32%, while revenues are will go up 14.8%.
 
Upbeat Manufacturing Data Instill Confidence
 
The fourth-quarter earnings projections for the industrial sector are backed by upbeat manufacturing data, strong housing and commercial construction markets, solid job additions and an improving U.S economy. Industrial production, one of the leading economic indicators for industrial stocks, rose 8.2% at an annual rate in the quarter. This is a measure of the output level in the manufacturing, mining and utilities sectors of a country. The upbeat performance can be attributed to a 7% jump in manufacturing and 12.7% rise in mining output. 
 
Manufacturing activity also closed on a high in 2017 as evident from the December PMI (Purchasing Managers' Index) reading of 59.7, per the Institute for Supply Management (“ISM”). The reading marked the fastest pace of expansion since 2011. The PMI is an indicator of the economic health of the manufacturing sector, with a reading above 50 signaling increased factory activities. 
 
The score can be attributed to strong expansion in new orders and production, both delivering positive growth trends for 16 straight months. With this, manufacturing has delivered growth for 16 consecutive months. Notably, in 2017, the ISM manufacturing index averaged the highest readings for a calendar year in the last 13.
 
Over the past year, the industrial products sector has thus clocked a gain of 22%, ahead of the S&P 500’s 15%. The sector has a Zacks Sector Rank of 5, which can be attributed to the fact that majority of the 214 industries within the sector have performed well of late and are poised to maintain the momentum.
 
A few industrial machinery companies are lined up to report their December-ending quarter numbers on Feb 7. Let’s take a look at how these companies are positioned ahead of their releases. 
 
Ball Corporation (BLL - Free Report) , which supplies metal packaging products to the beverage, food, personal care, and household industries worldwide, is scheduled to report fourth-quarter 2017 results before the opening bell. The company registered a year-over-year improvement in both the top and the bottom lines in the last reported quarter.
 
In the preceding quarter, the company delivered a negative earnings surprise of 11.9%. Despite the company beating the Zacks Consensus Estimate for earnings in two of the trailing four quarters, it has an average negative earnings surprise of 1.05%.

Ball Corporation Price and EPS Surprise
 
Ball Corporation Price and EPS Surprise

Ball Corporation price-eps-surprise | Ball Corporation Quote

The manufacturing inefficiencies experienced in the food and aerosol segment will affect results in the to-be-reported quarter. Also, severe impact of hurricanes in 2017 might reflect in the results. Escalation in freight rates after the hurricanes and higher interest expenses are likely to dent margins.

For the quarter to be reported, the company has an Earnings ESP of -3.10% and a Zacks Rank #3 (Hold), making an earnings beat unlikely. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 for a likely earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here. (Read more: Will Rising Costs Impact Ball Corp's Q4 Earnings?)

Crown Holdings, Inc. (CCK - Free Report) , a leading global manufacturer of packaging products for consumer goods, is slated to release fourth-quarter 2017 results after market close. The company delivered an improvement in revenues and earnings in the last reported quarter.
 
Last quarter, adjusted earnings were in line with the Zacks Consensus Estimate. Notably, Crown Holdings’ earnings have surpassed estimates in two of the trailing four quarters, the average positive earnings surprise being 1.17%.
 
Crown Holdings, Inc. Price and EPS Surprise
 
Crown Holdings, Inc. Price and EPS Surprise

Crown Holdings, Inc. price-eps-surprise | Crown Holdings, Inc. Quote

Crown Holdings’ fourth-quarter performance will likely reflect the impact of the disruptions caused by hurricanes. The company has two large beverage can plants in the Houston area. The supply chain was severely disrupted by the hurricanes. Also, in the aerosol can business, many of the customers could not receive industrial gases because of the Houston shutdown. Also, volumes in the Middle East remain under pressure due to the ongoing conflicts.

The combination of Crown Holdings’ Zacks Rank #3 and an Earnings ESP of -2.33% makes an earnings beat unlikely. 
 
Berry Global Group, Inc. (BERY - Free Report) , a leading global manufacturer and marketer of value-added plastic consumer packaging and engineered materials, is scheduled to report first-quarter fiscal 2018 results before the opening bell. In the last reported quarter, the company had witnessed year-over-year improvement in revenues and earnings.

Berry Global Group Price and EPS Surprise
 
Berry Global Group Price and EPS Surprise

Berry Global Group price-eps-surprise | Berry Global Group Quote

While the company will benefit from its cost-reduction efforts and internal investments, raw material inflation will likely impact earnings in the to-be-reported quarter. Though Berry Global’s Zacks Rank #2 increases the predictive power of ESP, its -1.54% ESP makes a beat unlikely.

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