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Emerson (EMR) to Report Q3 Earnings: What's in the Cards?

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Emerson Electric Co.(EMR - Free Report) is scheduled to report third-quarter fiscal 2018 (ended June 2018) results on Aug 7, before the market opens.

The company pulled off an average positive earnings surprise of 4.55%, over the last four quarters. Notably, in the last reported quarter, Emerson’s earnings of 76 cents per share surpassed the Zacks Consensus Estimate by 7.04%. The estimate for the to-be-reported quarter is pegged at 86 cents. The stock carries a Zacks Rank #3 (Hold), at present.

Let us see how things are shaping up for the company prior to this announcement.

Factors to Influence Q3 Results

Emerson expects that elevated demand across all end-markets will drive its top-line results in the quarters ahead.

Strong sales from China and North America will likely continue to drive sales in the hybrid, process and discrete end-markets. Ongoing maintenance, repair and overhaul (MRO) projects, and improved turnaround activity are expected to bolster energy market revenues. Moreover, optimization projects and petrochemical upgrade will likely continue to spur demand in chemical markets, moving ahead. Emerson also projects that demand for air-conditioning and refrigeration will remain strong in the quarters ahead. Also, Greenfield investment activities will likely drive its global power business revenues.

The company currently anticipates securing organic revenue growth of 7-7.5% in third-quarter fiscal 2018. The Zacks Consensus Estimate for fiscal third-quarter revenues of the company’s Commercial and Residential Solutions, Industrial Automation and Tools and Home Products segments are currently pegged at $1,649 million, $2,843 million and $386 million, respectively, higher than the corresponding tallies of $1,483 million, $2,117 million and $355 million recorded in the preceding quarter.

Emerson expects that operational leverage, benefits secured from prior restructuring actions, as well as its cost-reduction initiatives might have aided in enhancing the company’s profitability in the quarter to be reported. However, cost inflation in certain inputs remains a cause of concern.

The Zacks Consensus Estimates for Q3 earnings before interest and tax of the company’s Commercial and Residential Solutions, Industrial Automation and Tools and Home Products segments are currently pegged at $412 million, $457 million and $98 million, respectively, higher than the corresponding tallies of $349 million, $436 million and $96 million recorded in the preceding quarter.

Stocks to Consider

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 for a likely earnings beat.

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

However, 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 revision momentum.

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

Actuant Corporation (ATU - Free Report) , with an Earnings ESP of +4.72% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar Inc. (CAT - Free Report) , with an Earnings ESP of +0.57% and a Zacks Rank #1.

HD Supply Holdings, Inc. (HDS - Free Report) , with an Earnings ESP of +1.44% and a Zacks Rank #2.

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