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Actuant (ATU) to Post Q2 Earnings: What's in the Offing?

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Actuant Corporation (ATU - Free Report) is scheduled to report second-quarter fiscal 2018 (ended February 2018) results on Mar 21, before the opening bell.

The company delivered an average negative earnings surprise of 2.27% over the last four quarters. However, its adjusted earnings per share for first-quarter fiscal 2018 (ended November 2017) came in at 19 cents per share, beating the Zacks Consensus Estimate by a penny.

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

Factors to Play

Actuant expects that sturdier demand for industrial tools will bolster revenues of its Industrial segment. Additionally, improved sales from major end-markets (like agriculture, heavy-duty truck and off-highway equipment) are anticipated to drive the top-line performance of its Engineered Solutions segment going forward.

Moreover, the company believes restructuring moves undertaken to limit business exposure to upstream and offshore oil & gas markets will help strengthen its financial fundamentals in the to-be-reported quarter.

However, over the past month, Actuant’s shares have lost 1.7%, as against 0.6% growth recorded by the industry.

We fear that prevailing energy market challenges, like volatile oil price and customer maintenance deferrals, will continue to hurt the Energy segment’s results in the fiscal second quarter.

Furthermore, sales-mix headwinds, sustained investments made in commercial effectiveness actions and price inflation of some inputs might drag down Actaunt’s near-term margins.

Also, other headwinds such as stiff business rivalry and unfavorable exchange-rate fluctuations might dent the company’s top- and bottom-line results.

Actuant anticipates to report revenues of $265-$275 million and earnings of 10-15 cents in the fiscal second quarter.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for a likely earnings beat.

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

That is not the case here as we will see below.

Zacks ESP: Actuant currently has an Earnings ESP of 0.00%. This is because the Zacks Consensus Estimate of 14 cents is in line with the Most Accurate estimate.

Actuant Corporation Price and EPS Surprise


Actuant Corporation Price and EPS Surprise | Actuant Corporation Quote

Zacks Rank: Actuant’s unfavorable Zacks Rank #4 (Sell), when combined with an earnings ESP of 0.00%, makes surprise predictions difficult.

It should be noted that 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.

Stocks to Consider

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

Bemis Company, Inc. (BMS - Free Report) , with an Earnings ESP of +6.48% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar Inc. (CAT - Free Report) , with an Earnings ESP of +3.77% and a Zacks Rank of 2.

Deere & Company (DE - Free Report) , with an Earnings ESP of +0.25% and a Zacks Rank of 2.

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