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Ingersoll-Rand (IR) to Post Q1 Earnings: What's in Store?

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Ingersoll-Rand Plc (IR - Free Report) is slated to report first-quarter 2019 results on Apr 30, before market open.

The company reported better-than-expected results in each of the trailing four reported quarters, the average positive earnings surprise being 6.33%. Notably, Ingersoll's fourth-quarter 2018 adjusted earnings of $1.32 per share outpaced the Zacks Consensus Estimate of $1.28.

Over the past three months, the company’s shares have gained 12.5% compared with the industry’s growth of 13.8%.

Factors to Influence Q1 Results

Ingersoll believes that the prospects in its end markets are bright. The company is likely to benefit from strength in its commercial Heating, Ventilation and Air Conditioning (HVAC) business across all geographies. In its residential HVAC business, the company stands to gain from continued strength in replacement markets. In addition, strength in the transport solutions, industrial fluid management and material handling businesses will bolster its first-quarter revenues.

Moreover, robust sales volume, increased productivity and its pricing actions will boost the company’s profitability in the first quarter. In addition, Ingersoll’s investments toward plant consolidation projects for commercial HVAC, product development and information technology will drive its competency. Notably, new investments made toward footprint-optimization initiatives are expected to trim costs and expand the company’s margins in the quarter. Also, its ongoing direct sales strategy has been fortifying its commercial footprint across the Chinese markets.

Amid this backdrop, the Zacks Consensus Estimate for first-quarter 2019 revenues of the company’s Climate and Industrial segments are currently pegged at $2,710 million and $792 million, respectively. Notably, the Climate segment reported revenues of $2,610 million and Industrial segment generated $775 million in the year-ago quarter.

However, rising cost is a major concern for Ingersoll. As a matter of fact, material cost inflation (on account of Section 232 and Section 301 tariff implementation) might escalate its costs, in turn, affecting its first-quarter profitability. In addition, costs associated with factory consolidation, and new product development initiatives might affect its results.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Ingersoll is given below.

Earnings ESP: It has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 79 cents.

Zacks Rank: The company carries a Zacks Rank #3, which increases the predictive power of the ESP. However, its ESP of 0.00% makes surprise prediction difficult.

Note 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.

Key Picks

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

DXP Enterprises, Inc. (DXPE - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation (DOV - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank #2.

Century Aluminum Company (CENX - Free Report) has an Earnings ESP of +1.06% and a Zacks Rank #2.

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