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Industrial Stocks to Watch for Earnings on Nov 5: KMT & More

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U.S. industrial production saw its 4th-straight monthly gain this September. The headline numbers primarily improved on the back of robust manufacturing and mining output. The December-enacted tax overhaul, increased government spending and a favorable job-market scenario are expediting business investments and boosting the performance of industrial stocks. Nonetheless, a strong U.S. dollar, escalating trade tensions between the United States and other economies, flaring up freight charges, and shortage of skilled workers remain key causes of concern for these businesses.

The Zacks Industrial Products sector is one of the 16 Zacks sectors. Per our Earnings Outlook (dated Oct 31, 2018), roughly 66.7% S&P 500 stocks from the sector have reported results for this quarter, recording 21.8% rise in earnings and 7% upside in revenues on a year-over-year basis. In the third quarter, the sector’s earnings are predicted to be up 19.9% year over year on revenue growth of 7.4%.

What’s in the Cards for These 3 Industrial Stocks?

Kennametal Inc. (KMT - Free Report) is slated to report first-quarter fiscal 2019 (ended September 2018) results after the market closes. The company came up with an average positive earnings surprise of 11.21% in the last four quarters. Our proven model states that the Kennametal will keep its earnings streak alive in the to-be-reported quarter.

This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

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

Kennametal’s favorable Zacks Rank of 2, when combined with an Earnings ESP of +0.22%, predicts a likely earnings beat.

Kennametal Inc. Price and EPS Surprise

 

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

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is currently pegged at 65 cents. Stellar end-market sales, price-realization efforts, diligent cost-cutting initiatives and strategic restructuring moves (such as head-count reduction) will likely boost the stock’s performance in the Jul-Sep quarter.

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

Welbilt, Inc.  is set to report third-quarter 2018 results before the market opens. The company delivered an average positive earnings surprise of 11.83% in the past four quarters. However, our proven model does not conclusively show that Welbilt will beat earnings estimates in the quarter.  

The company’s favorable Zacks Rank of 3, when combined with an Earnings ESP of 0.00%, makes surprise prediction inconclusive.

Welbilt, Inc. Price and EPS Surprise

 

Welbilt, Inc. Price and EPS Surprise | Welbilt, Inc. Quote

The Zacks Consensus Estimate and Most Accurate Estimate for the company’s Sep-end earnings are both pegged at 27 cents per share. The company is poised to boost its performance on the back of new innovation investments, business expansion in the dealer market and partnership deals with industry disruptors. However, setbacks, like slowing KitchenCare aftermarket parts sales, and persistence of material price inflation, might dent its performance, going forward.    

Helios Technologies (formerly known as Sun Hydraulics Corporation) will report third-quarter results after the market closes. The company pulled off an average positive earnings surprise of 1.85% in the past four quarters. However, our proven model does not conclusively show that Helios will beat earnings estimates in the quarter under review.

The company’s Zacks Rank #4 (Sell), when combined with an Earnings ESP of 5.15%, makes surprise prediction inconclusive.

The Zacks Consensus Estimate for the company’s earnings is currently pegged at 47 cents, lower than the Most Accurate Estimate of 49 cents per share.  Helios is well positioned to benefit from solid end-market sales and greater operational efficacy. Nonetheless, prevalent supply-chain constraints may weigh over the stock’s near-term performance.

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 negative estimate revisions.

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