Ingersoll-Rand plc (IR - Free Report) is slated to report second-quarter 2019 results on Jul 30, before market open.
The company delivered average positive earnings surprise of 6.27% in the trailing four quarters, beating estimates all through. Notably, Ingersoll's first-quarter adjusted earnings of 89 cents per share outpaced the Zacks Consensus Estimate of 79 cents.
Over the past six months, the company’s shares have rallied 29.6% compared with 21.5% growth recorded by the industry it belongs to.
We expect the company to score an earnings beat in the second quarter as well.
Why a Likely Positive Surprise
Our proven model shows that Ingersoll has the right combination of the two key ingredients to beat earnings. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This is the case here as you will see below:
Earnings ESP: Ingersoll has an Earnings ESP of +1.40% as the Most Accurate Estimate is pegged at $2.08, higher than the Zacks Consensus Estimate of $2.05.
Zacks Rank: The company carries a Zacks Rank #2, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors Likely to Drive Better-Than-Expected Q2 Results
Ingersoll is well positioned to benefit from strength in its end markets. The company’s commercial heating, ventilation and air conditioning (HVAC) business is expected to have gained from strong demand across North America and Europe in the second quarter. Also, strong bookings in residential HVAC business will be tailwinds. In addition, strength in industrial fluid management and compression technologies businesses in North America will bolster its quarterly revenues.
Also, Ingersoll expects increased productivity and pricing actions to boost its second-quarter bottom-line growth. In addition, the company’s investments in plant consolidation projects for commercial HVAC, information technologies and operational excellence projects will drive its competency. Notably, new investments made toward footprint optimization initiatives are expected to trim costs and expand the company’s margins. Moreover, Ingersoll’s ongoing direct sales strategy has been remarkably fortifying its commercial footprint across Chinese markets.
Against this backdrop, the Zacks Consensus Estimate for second-quarter 2019 revenues of the company’s Climate and Industrial segments is currently pegged at $3,683 million and $884 million, respectively. Notably, the Climate segment reported revenues of $3,494 million and Industrial segment generated $864 million in the year-earlier quarter.
Moreover, given its earnings strength and impressive growth strategies, Ingersoll is expected to continue enhancing shareholder value through efficient capital deployment activities.
Other Stocks to Consider
Here are some other 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:
AptarGroup, Inc. (ATR - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Terex Corporation (TEX - Free Report) has an Earnings ESP of +1.56% and a Zacks Rank #3.
ACCO Brands Corporation (ACCO - Free Report) has an Earnings ESP of +0.63% and a Zacks Rank #3.
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