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What's in the Cards for Pentair (PNR) This Earnings Season?

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Pentair plc (PNR - Free Report) is scheduled to report first-quarter 2018 results before the market opens on Apr 19.

In the last reported quarter, Pentair’s adjusted earnings per share missed the Zacks Consensus Estimate by more than 1%. However, the company delivered an average positive earnings surprise of roughly 1.9% in the trailing four quarters.

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

Pentair plc Price and EPS Surprise

 

Pentair plc Price and EPS Surprise | Pentair plc Quote

Key Factors to Consider

Pentair’s performance in the first quarter is expected to be primarily backed by strength in Enclosures and Process businesses. Strong demand and improvement in capacity investments will support margins and drive income of the Enclosures business. Moreover, the company’s Process business will benefit from easier comparisons in 2018, and growth in higher margin residential and commercial business. However, volatile end markets, raw material price inflation and strengthening of the U.S. dollar remain headwinds for the company’s results.

For the first quarter, Pentair guided adjusted EPS in the range of 81-83 cents, reflecting 26% year-over-year growth at the mid-point. The Zacks Consensus Estimate for earnings edged down roughly 1.2% over the last 60 days and is currently pegged at 83 cents. Nevertheless, the earnings estimate reflects roughly 28% year-over-year growth and is at the higher end of Pentair’s first-quarter guided range.

Pentair also projected that its revenues will be around $1.26 billion in the quarter to be reported, up around 6% on a reported basis and 3% on a core basis compared with first-quarter 2017. The Zacks Consensus Estimate for sales is pegged at $1.25 billion, reflecting year-over-year growth of nearly 6%.

Meanwhile, Pentair stated that the first quarter represents the end of reporting earnings as a single company comprising the Water and Electrical segments, due to the separation of its businesses into two standalone companies. The company’s board recently approved the plan. Pentair will continue to operate as a leading global water company focused on smart, sustainable solutions post separation.

Our consensus estimates indicate that sales of Pentair’s Water Quality Systems segment will reach $711 million in the to-be-reported quarter, reflecting 4% year-over-year growth. Further, the Zacks Consensus Estimate for segment income is pegged at $122 million for the quarter, reflecting 5% year-over-year improvement. The Water business is expected to experience some seasonality which might affect its results.

Pentair’s shares have underperformed the industry it belongs to over the past year, affected by the prevalent headwinds. The stock has gained 10.5% compared to 25% growth recorded by the industry.

Zacks Rank & Other Key Picks

Pentair carries a Zacks Rank #2 (Buy).

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

Axon Enterprise, Inc (AAXN - Free Report) , with an Earnings ESP of +12.50% and a Zacks Rank #1 (Strong Buy). The stock has soared 94% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar Inc. (CAT - Free Report) , with an Earnings ESP of +3.41% and a Zacks Rank #3 (Hold). Its shares have rallied 60% in the past year.

Terex Corporation (TEX - Free Report) , with an Earnings ESP of +1.96% and a Zacks Rank #3. The company’s shares have been up 22% during the same time frame.

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