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The first-quarter earnings season is rapidly unwinding with 87 members of the S&P 500 index already having released results. By the end of this week, more than half of the S&P 500 members will have reported financial numbers. The trajectory so far indicates that growth of earnings and revenues are treading materially above historical levels.
Per the latest Earnings Preview, total earnings for the companies who have reported are up 25% year over year on 10.7% higher revenues. The beat ratio is impressive with 82.8% companies surpassing bottom-line expectations and 67.8% outperforming on the top-line front. In fact, 62.1% of companies have topped both EPS and revenue estimates.
Clearly, the first quarter of 2018 is projected to register better earnings growth and revenue momentum than what we have witnessed in the previous quarters.
Overall earnings for all the S&P 500 are expected to be up 18.3% on 7.7% growth in revenues. This represents an improved growth projection from the previous quarter and is likely to be driven by a corporate tax overhaul and relatively healthy job data.
In fact, we expect double-digit year-over-year earnings growth for 11 of the 16 Zacks sectors. The Industrial Products sector, placed at the top 6% out of the 16 Zacks sectors, is one of the sectors expected to record double-digit earnings growth, mainly driven by the U.S. tax reforms.
After struggling with soft commodity prices, reduced investment in the energy sector and dismal economic conditions in some developed and developing nations in the last few years, the sector seems to have regained its momentum in 2017. The turnaround was primarily driven by higher infrastructure spending and other growth-friendly policies of the new administration. Rise in manufacturing and mining activity also played a crucial role.
Industrial production is one of the leading economic indicators for industrial stocks. For first-quarter 2018, industrial production — a measure of output at factories, mines and utilities — rose at an annual rate of 4.5%. Also, the Purchasing Managers Index (PMI) tally was 59.3% in March. This indicates strong growth in manufacturing, led by continued expansion in new orders, production activity, employment and inventories.
According to our latest projections, the sector is projected to log an earnings growth of 25.8% in first-quarter 2018 on the back of 12.8% rise in revenues.
However, this does not ensure earnings beat for all companies in the space. A company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans. Notably, our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high.
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 a negative estimate revisions momentum. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s take a sneak peek at some companies from the sector scheduled to report quarterly figures tomorrow and see how things are shaping up for the upcoming results.
Illinois Tool Works Inc. (ITW - Free Report) is scheduled to report first-quarter 2018 results before the opening bell.The company, which manufactures and sells industrial products and equipment, has an impressive earnings surprise history. It beat estimates each time over the last four quarters, with an average positive surprise of 4.2%. In the last reported quarter, the company surpassed estimates by 4.9%.
Our quantitative model hints at an earnings beat for this Zacks Rank #3 company in the upcoming quarterly results.This is because it has an Earnings ESP of +1.02% (the Most Accurate estimate of $1.87 being higher than the Zacks Consensus Estimate of $1.85), in addition to a favorable Zacks Rank. (Read more: Illinois Tool Earnings Likely to Beat Estimates in Q1).
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
Similarly, we expect Milacron Holdings Corp. to outperform estimates in first-quarter 2018. The company — which manufactures, distributes, and services engineered and customized systems within the plastic technology and processing industry — beat estimates thrice in the last four quarters, for an average positive surprise of 9.4%. In the last reported quarter, the company surpassed estimates by 20.5%.
A favorable rank and positive Earnings ESP hint toward an earnings beat this season for the company. Its Earnings ESP of +2.33% and a Zacks Rank #3 indicate that Milacron’searnings is likely to beat estimates. Its Most Accurate estimate of 40 cents is higher than the Zacks Consensus Estimate of 39 cents. (For more details: Will Solid Order Levels Drive Milacron's Q1 Earnings?)
Milacron Holdings Corp. Price, Consensus and EPS Surprise
Parker-Hannifin Corporation (PH - Free Report) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company has a robust earnings surprise history, having beaten estimates each time in the preceding four quarters, for an average positive surprise of 8.5%. In the last reported quarter, the company trumped estimates by 4.4%.
However, we do not expect Parker-Hannifin to beat estimates in third-quarter fiscal 2018 results. Though the company’s Zacks Rank #3 increases the predictive power of ESP, its Earnings ESP of -0.37% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at $2.62. (Read more: Is a Beat in Store for Parker-Hannifin in Q3 Earnings?)
Parker-Hannifin Corporation Price, Consensus and EPS Surprise
Applied Industrial Technologies, Inc. (AIT - Free Report) distributes industrial products. The company has a strong earnings surprise history, beating estimates each time in the preceding four quarters, for an average positive surprise of 11%. In the last reported quarter, the company beat estimates by 8.5%.
However, we do not expect Applied Industrial to beat estimates in third-quarter fiscal 2018 results. Though the company’s Zacks Rank #3 increases the predictive power of ESP, its Earnings ESP of -6.43% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at 86 cents. You cansee the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial Technologies, Inc. Price, Consensus and EPS Surprise
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Image: Bigstock
Machinery Stocks' Apr 26 Earnings Roster: ITW, PH, AIT, MCRN
The first-quarter earnings season is rapidly unwinding with 87 members of the S&P 500 index already having released results. By the end of this week, more than half of the S&P 500 members will have reported financial numbers. The trajectory so far indicates that growth of earnings and revenues are treading materially above historical levels.
Per the latest Earnings Preview, total earnings for the companies who have reported are up 25% year over year on 10.7% higher revenues. The beat ratio is impressive with 82.8% companies surpassing bottom-line expectations and 67.8% outperforming on the top-line front. In fact, 62.1% of companies have topped both EPS and revenue estimates.
Clearly, the first quarter of 2018 is projected to register better earnings growth and revenue momentum than what we have witnessed in the previous quarters.
Overall earnings for all the S&P 500 are expected to be up 18.3% on 7.7% growth in revenues. This represents an improved growth projection from the previous quarter and is likely to be driven by a corporate tax overhaul and relatively healthy job data.
In fact, we expect double-digit year-over-year earnings growth for 11 of the 16 Zacks sectors. The Industrial Products sector, placed at the top 6% out of the 16 Zacks sectors, is one of the sectors expected to record double-digit earnings growth, mainly driven by the U.S. tax reforms.
After struggling with soft commodity prices, reduced investment in the energy sector and dismal economic conditions in some developed and developing nations in the last few years, the sector seems to have regained its momentum in 2017. The turnaround was primarily driven by higher infrastructure spending and other growth-friendly policies of the new administration. Rise in manufacturing and mining activity also played a crucial role.
Industrial production is one of the leading economic indicators for industrial stocks. For first-quarter 2018, industrial production — a measure of output at factories, mines and utilities — rose at an annual rate of 4.5%. Also, the Purchasing Managers Index (PMI) tally was 59.3% in March. This indicates strong growth in manufacturing, led by continued expansion in new orders, production activity, employment and inventories.
According to our latest projections, the sector is projected to log an earnings growth of 25.8% in first-quarter 2018 on the back of 12.8% rise in revenues.
However, this does not ensure earnings beat for all companies in the space. A company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans. Notably, our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high.
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 a negative estimate revisions momentum. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s take a sneak peek at some companies from the sector scheduled to report quarterly figures tomorrow and see how things are shaping up for the upcoming results.
Illinois Tool Works Inc. (ITW - Free Report) is scheduled to report first-quarter 2018 results before the opening bell.The company, which manufactures and sells industrial products and equipment, has an impressive earnings surprise history. It beat estimates each time over the last four quarters, with an average positive surprise of 4.2%. In the last reported quarter, the company surpassed estimates by 4.9%.
Our quantitative model hints at an earnings beat for this Zacks Rank #3 company in the upcoming quarterly results.This is because it has an Earnings ESP of +1.02% (the Most Accurate estimate of $1.87 being higher than the Zacks Consensus Estimate of $1.85), in addition to a favorable Zacks Rank. (Read more: Illinois Tool Earnings Likely to Beat Estimates in Q1).
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
Illinois Tool Works Inc. Price, Consensus and EPS Surprise | Illinois Tool Works Inc. Quote
Similarly, we expect Milacron Holdings Corp. to outperform estimates in first-quarter 2018. The company — which manufactures, distributes, and services engineered and customized systems within the plastic technology and processing industry — beat estimates thrice in the last four quarters, for an average positive surprise of 9.4%. In the last reported quarter, the company surpassed estimates by 20.5%.
A favorable rank and positive Earnings ESP hint toward an earnings beat this season for the company. Its Earnings ESP of +2.33% and a Zacks Rank #3 indicate that Milacron’searnings is likely to beat estimates. Its Most Accurate estimate of 40 cents is higher than the Zacks Consensus Estimate of 39 cents. (For more details: Will Solid Order Levels Drive Milacron's Q1 Earnings?)
Milacron Holdings Corp. Price, Consensus and EPS Surprise
Milacron Holdings Corp. Price, Consensus and EPS Surprise | Milacron Holdings Corp. Quote
Parker-Hannifin Corporation (PH - Free Report) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company has a robust earnings surprise history, having beaten estimates each time in the preceding four quarters, for an average positive surprise of 8.5%. In the last reported quarter, the company trumped estimates by 4.4%.
However, we do not expect Parker-Hannifin to beat estimates in third-quarter fiscal 2018 results. Though the company’s Zacks Rank #3 increases the predictive power of ESP, its Earnings ESP of -0.37% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at $2.62. (Read more: Is a Beat in Store for Parker-Hannifin in Q3 Earnings?)
Parker-Hannifin Corporation Price, Consensus and EPS Surprise
Parker-Hannifin Corporation Price, Consensus and EPS Surprise | Parker-Hannifin Corporation Quote
Applied Industrial Technologies, Inc. (AIT - Free Report) distributes industrial products. The company has a strong earnings surprise history, beating estimates each time in the preceding four quarters, for an average positive surprise of 11%. In the last reported quarter, the company beat estimates by 8.5%.
However, we do not expect Applied Industrial to beat estimates in third-quarter fiscal 2018 results. Though the company’s Zacks Rank #3 increases the predictive power of ESP, its Earnings ESP of -6.43% makes surprise prediction difficult. The Zacks Consensus Estimate for the quarter is pegged at 86 cents. You cansee the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial Technologies, Inc. Price, Consensus and EPS Surprise
Applied Industrial Technologies, Inc. Price, Consensus and EPS Surprise | Applied Industrial Technologies, Inc. Quote
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them>>