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Industrial Stocks Earnings Lineup for Jul 25: IR, ROK & More

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The Q2 earnings season has kicked off on an impressive note, with total earnings for the 87 S&P 500 members that have released results so far, surging 20.9% year over year on 10.3% higher revenues, per the latest Earnings Trends report. Notably, overall earnings for all the S&P 500 companies are expected to be up 21% on 8.3% growth in revenues this season. Notably in the first quarter, total earnings growth was pegged at 24.6% on 8.7% higher revenues — its highest growth in almost seven years.
 
Industrial Sector on Growth Path
 
The Industrial Products sector is one of the sectors which are expected to record double-digit earnings growth this quarter. According to our latest numbers, the sector’s earnings are on track to be up 27% in the quarter compared with last year.
 
Industrial production is one of the leading economic indicators for industrial stocks. U.S. industrial production rose 0.6% in June after declining 0.5% in May. Overall, for the second quarter, industrial production improved at an annual rate of 6% — marking its third consecutive quarterly increase. Manufacturing output inched up 0.8% in June and increased at an annual rate of 1.9% for the second quarter. Mining output increased 1.2% in June marking its fifth consecutive monthly increase and hit an all-time high aided by gains in the oil and gas sector. The index jumped more than 19% at an annual rate in the second quarter.
 
Further, improved trend in new orders, strong housing and commercial construction markets, growth in job additions and an improving U.S economy bode well for the sector.
 
It will be interesting to see how some of the industrial stocks fare when the companies release second-quarter 2018 numbers on Jul 25.
 
Ingersoll-Rand Plc (IR - Free Report) is scheduled to report second-quarter 2018 results before the opening bell. Stellar top-line growth, pricing actions and improved productivity are projected to be conducive to Ingersoll’s near-term performance. However, inflationary headwinds remains a woe. Material cost inflation across tier 1 and tier 2 markets might weigh over the company’s margins. Moreover, escalating freight charges and investments over high ROI projects are likely to hurt the company’s profitability.
 
Ingersoll-Rand PLC (Ireland) Price and EPS Surprise
 
Ingersoll-Rand PLC (Ireland) Price and EPS Surprise

Ingersoll-Rand PLC (Ireland) price-eps-surprise | Ingersoll-Rand PLC (Ireland) Quote

The Zacks Consensus Estimate of $1.72 per share for the yet-to-be-reported quarter reflects a year-over-year increase of 15.4%. The company has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 3.91%. (Read More: Ingersoll to Post Q2 Earnings: Another Beat in Store?)

However our model does not indicate that the company is likely to beat on earnings this time around, as it has a Zacks Rank #2 (Buy) and an Earnings ESP of -0.10%. Though a Zacks Rank of 2 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.

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

Rockwell Automation Inc. (ROK) is slated to report third-quarter fiscal 2018 results before the opening bell.

Improving global macroeconomic conditions and industrial production along with growing orders bode well for a fiscal third-quarter performance. The company will benefit from growth in heavy industries vertical.  However, the Transportation vertical will remain weak.

The company’s earnings have surpassed estimates in three of the trailing four quarters, recording an average positive earnings surprise of 5.64%. The Zacks Consensus Estimate for earnings at $2.03 per share reflects a year-over-year improvement 15%.

Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. price-eps-surprise | Rockwell Automation, Inc. Quote

We remain reasonably certain on an earnings beat this quarter as it has an Earnings ESP of +0.23% and a Zacks Rank #2. (Read More: Rockwell Automation Q3 Earnings: What's in the Offing?)

Pentair plc (PNR - Free Report) , which will report second-quarter 2018 results before the market opens, has a Zacks Rank #3 (Hold) and an Earnings ESP of -0.97%, a combination which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters and came in line in one quarter, delivering an average positive surprise of 1.78%. Pentair’s second-quarter performance is expected to primarily reflect positive impact of the separation of the Electrical business. However, material cost inflation and strengthening of the U.S. dollar remain headwinds. The Zacks Consensus Estimate for earnings is pegged at 69 cents, reflecting roughly 45% year-over-year growth. (Read more: Pentair to Report Q2 Earnings: What's in the Cards?)

 
Pentair plc Price and EPS Surprise

Pentair plc Price and EPS Surprise

Pentair plc price-eps-surprise | Pentair plc Quote

Graco Inc. (GGG), will report second quarter 2018 results after the market closes on Jul 25. Increasing manufacturing activity in the United States is expected to spur the demand for Graco's products. The company also anticipates its previously made acquisitions, favorable foreign currency translation, sturdier demand for all the major product lines and product development to continue to drive its top and bottom-line growth trajectory in the quarters ahead. However, elevated material prices will remain a headwind.

The Zacks Consensus Estimate for the to-be-reported quarter is pegged at 50 cents, reflecting an year-over-year rise of 8.7%. Over the last four quarters, the company outpaced the Zacks Consensus Estimate in three occasions while missing in one, recording an average positive surprise of 12.8%.

Graco has a Zacks Rank #1 and an Earnings ESP of +4.00%, the right combination of two key ingredients for an earnings beat.

Graco Inc. Price and EPS Surprise

Graco Inc. Price and EPS Surprise

Graco Inc. price-eps-surprise | Graco Inc. Quote

John Bean Technologies Corporation (JBT) will report second-quarter 2018 results after the market closes.

John Bean Technologies Corporation Price and EPS Surprise
 

John Bean Technologies Corporation Price and EPS Surprise

John Bean Technologies Corporation price-eps-surprise | John Bean Technologies Corporation Quote

The Zacks Consensus Estimate for the to-be-reported quarter is at $1.05, depicting year-over-year growth of 81%. The company has an average positive earnings surprise history of 4.03% in the trailing four quarters.

However, the company has an Earnings ESP of -0.64%, which combined with a Zacks Rank #4 (Sell), lowers the predictive power of ESP and leaves our surprise prediction inconclusive.

Notably, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

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