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Pentair (PNR) to Report Q1 Earnings: What's in the Offing?

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Pentair plc PNR is expected to report first-quarter 2020 results on Apr 20, before market open. Notably, the company surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 3.66%.

A Sneak Peek into Q4 Results

Pentair delivered better-than-expected fourth-quarter 2019 results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate and improved year over year.

Which Way are Estimates Treading?

The Zacks Consensus Estimate for first-quarter revenues is pegged at $691 million, indicating an improvement of 0.3% from the year-ago quarter. The same for earnings stands at 45 cents, suggesting growth of 4.6% year on year.

The Zacks Consensus Estimate for the March-end quarter’s earnings moved south over the past 30 days.

Let’s see how things have shaped up prior to this announcement.

Key Factors

Recently, the company suspended operations in many of its major facilities due to lower production in the wake of the coronavirus outbreak. Consequently, Pentair has withdrawn its financial guidance for the second quarter as well as for the current year. Its production was interrupted by the stay-at-home orders during the March-end quarter, as a result of which, the company was compelled to reduce operations in several facilities. These factors are likely to have thwarted the quarterly performance.

The company is undertaking precautionary measures to ensure good health and safety of its employees, while also taking actions to lower costs and expenses, reduce capital expenditure, and managing working capital. Although the scale and magnitude of the outbreak is still uncertain, the company’s robust balance sheet and sufficient liquidity poise it well to sail through the turbulent situation.

Pentair has undergone certain business-restructuring initiatives aimed at reducing fixed cost structure, which is likely to have aided margin growth in the first quarter. However, inflation in material and other costs, which include the impact of tariffs, is likely to get reflected in the company’s results, and consequently the bottom line for the quarter. Notably, productivity improvement and price hikes to combat higher input costs are likely to have negated the impact of elevated raw-material costs on its quarterly results.

From the first quarter, the company will report its business results under two segments — Consumer Solutions and Industrial & Flow Technologies (IFT). The segment restructuring will help better align customer products and service offerings to boost customer experience while also driving growth. 

Consumer Solutions is made up of pool and water solutions. Hence, the company’s continuous efforts to expand in the areas of pool as well as residential and commercial water treatment through acquisitions, introduction of water-treatment solutions, investments and innovations are anticipated to have contributed to the segment’s growth.

The IFT segment manufactures and sells pumps used in agricultural irrigation and crop spray. The current weakness in the agricultural sector is likely to have eroded the segment’s revenues during the January-March period.

Pentair plc Price and EPS Surprise

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Pentair this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Pentair is -4.55%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 43 cents per share and 45 cents, respectively.

Zacks Rank: Pentair currently carries a Zacks Rank of 4.

Price Performance

Shares of the company have declined 17.7%, over the past year, as against the industry’s loss of 17.8%.

Stocks Poised to Beat Earnings Estimates

Here are a few Industrial Products stocks which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Axon Enterprise, Inc. has an Earnings ESP of +3.03% and carries a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lawson Products, Inc. LAWS currently carries a Zacks Rank #3 and has an Earnings ESP of +3.85%.

Berry Global Group, Inc. (BERY - Free Report) , another Zacks #3 Ranked stock, has an Earnings ESP of +1.68%.

5 Stocks Set to Double

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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