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Machinery Stocks' Earnings to Watch on Aug 6: CFX, KMT & More

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Looking at the releases of the S&P 500 group, results released so far for the April-June quarter gives us a rosy picture. It’s worth mentioning here that the S&P 500 has gained 1% in three weeks ended Aug 2.

Per our latest Earnings Preview report, roughly 76.2% of the group members have reported results till Aug 2. Earnings of the companies, which already reported results, have increased 25% year over year while revenues expanded 10.4%. Beat was measured at 80.1% for earnings and 73.8% for revenues.

Here, we will talk about the machinery industry, broadly grouped under Industrial Products  — one of the 16 Zacks sectors. The sector has yielded 2.7% return in three weeks ended Aug 2, the performance being mainly driven by results and projections released by industrial companies during the period.

Moreover, we believe that the strengthening of industrial production in the United States, expanding manufacturing sector, solid orders for U.S.-made machinery and a healthy job market are a few other factors influencing the sector. Moreover, the implementation of the new tax policy in the country last December, as well as accelerating growth of the global and U.S. economies, will be conducive for industrial companies. However, increasing trade tensions between the United States and other foreign nations, resulting in higher raw material costs, are 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 quarter under review. The sector’s earnings are predicted to increase 34.5% year over year and revenues are anticipated to grow 12.4%.

For the S&P 500 group, earnings in the April-June quarter are projected to grow 23.9% year over year and revenues are anticipated to increase 9.3%.

What’s in Store for Machinery Companies: CFX, KMT, SNHY & SOHVY?

Below, we briefly discussed expectations from the four machinery stocks, slated to report their numbers for the April-June quarter.

Colfax Corporation (CFX - Free Report) : This machinery company will release its second-quarter results on Aug 6, before the market opens. Colfax delivered better-than-expected results in two of the last four quarters while reporting in-line results in the others. The average earnings surprise was a positive 4.14%.

Colfax Corporation Price, Consensus and EPS Surprise
 

Colfax Corporation Price, Consensus and EPS Surprise | Colfax Corporation Quote

Our proven model provides some idea about stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP (the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 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.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Currently, Colfax carries a Zacks Rank #3 and Earnings ESP of -2.05%. The company stands to gain from acquired assets and a solid product portfolio. However, uncertainty in the global economy, high debts and rising expenses can be detrimental for the company.

Over the past 60 days, the Zacks Consensus Estimate for the quarter under review has remained stable at 53 cents.

Kennametal Inc. (KMT - Free Report) : The company will report its fourth-quarter fiscal 2018 (ended June 2018) results on Aug 6, after the market closes. It recorded lower-than-expected results in three of the trailing four quarters while surpassing estimates in one. Despite this, average earnings surprise was a positive 6.91%.

Kennametal Inc. Price, Consensus and EPS Surprise
 

Kennametal Inc. Price, Consensus and EPS Surprise | Kennametal Inc. Quote

Presently, Kennametal carries a Zacks Rank #4 (Sell). The company is currently struggling with higher raw material costs, a weak cash position and huge debt levels. However, favorable pricing might bring in some relief.

Over the past 60 days, the Zacks Consensus Estimate for the quarter under review increased 1.2% to 82 cents.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Sun Hydraulics Corporation (SNHY - Free Report) : The company will release its second-quarter numbers on Aug 6, after the market closes. It delivered better-than-expected results in three of the last four quarters while lagging estimates in one. Average earnings surprise was a positive 15.28%.

Sun Hydraulics Corporation Price, Consensus and EPS Surprise
 

Sun Hydraulics Corporation Price, Consensus and EPS Surprise | Sun Hydraulics Corporation Quote

Currently, Sun Hydraulics carries a Zacks Rank #5. Over the past 60 days, the Zacks Consensus Estimate for the quarter under review decreased 5.3% to 54 cents.

Sumitomo Heavy Industries, Ltd. (SOHVY - Free Report) : The company will release its first-quarter fiscal 2019 (ended June 2018) numbers on Aug 6. The company currently carries a Zacks Rank #3.

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