The U.S. equity market is currently abuzz with earnings releases for the April-June quarter. Looking at the numbers of the S&P 500 group, results released so far gives us a rosy picture.
Per the latest Earnings Preview report, roughly 53% of the group members have reported results till Jul 27. So far, earnings of the companies, which already reported results, have increased 23.6% year over year while revenues have expanded 10.1%. Beat was measured at 80.8% for earnings and 72.1% for revenues.
For the Industrial Products — one of the 16 Zacks sectors, earnings results released so far must have been impressive. This is evident from nearly 2.2% return generated by the sector in two weeks ended Jul 27. We believe important releases in this week and the next to be a major determinant in the movements of the sector.
In addition to the earnings results, there are many other factors that are influencing the sector. Of those, strengthening of industrial production in the United States, expanding manufacturing sector, rise in orders for U.S.-made machinery and a healthy job market are a few important ones. Moreover, the domestic corporates are benefiting from the implementation of the new tax policy in the country last December.
Expanding global and U.S. economies will also be conducive for industrial companies in the country. Per the International Monetary Fund, the global economy will expand 3.9% in 2018 versus 3.7% growth recorded in 2017, while the U.S. economy is projected to grow 2.9% in 2018, higher than 2.3% in 2017.
On the flip side, increasing trade tensions between the United States and other foreign nations, especially China, is increasing the cost of raw materials — mainly of steel and aluminum — for industrial companies. This is a major threat to corporate margins at present.
Considering all the aspects, the Industrial Products sector seems well positioned to record earnings and sales growth in the April-June quarter. Notably, it is one the fourteen sectors that are expected to record positive earnings growth in the reported quarter. The sector’s earnings are predicted to increase 28.5% year over year while revenues are anticipated to grow 11.6%.
For the S&P 500 group, earnings in the April-June quarter are projected to grow 23.6% year over year while revenues are anticipated to increase 8.8%.
What’s in Store for Industrial Companies: CMPR, SITE, BDC and NPO?
Below, we briefly discussed the expectations from the four industrial stocks, which are slated to report their numbers for the April-June quarter.
Cimpress N.V. (CMPR - Free Report) : The company will release its results tomorrow, after the market closes. It delivered better-than-expected results in three of the last four quarters, while lagged estimates in one. The average earnings surprise was a positive 85.92%.
Cimpress N.V Price, Consensus and EPS Surprise