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Per the latest Earnings Trends, total earnings for the Industrial Products Sector are anticipated to decline 20.8%, while revenues are projected to drop 5.4% as the coronavirus pandemic crippled supply chain globally, impacted manufacturing activity and weakened demand. However, the slump is not restricted to this sector alone, as 11 of the 16 Zacks sectors are expected to log declines this earnings season.
Key Factors to Consider
Per the Federal Reserve, industrial production contracted 7.5% in the first quarter of 2020 — the steepest since second-quarter 2009. Manufacturing output also slumped at an annual rate of 7.1% in the first quarter, the sharpest since first-quarter 2009. Meanwhile, per the Institute for Supply Management, the Manufacturing Purchasing Managers’ Index (PMI), after recording 50.9 in January, and 50.1 in February (indicating expansion), contracted again to 49.1% in March. These figures clearly indicate that the manufacturing sector has been impacted by the pandemic and energy market volatility in the January-March period.
Hence, the sector’s performance in the first quarter is likely reflect the challenges associated with COVID-19 outbreak, which include factory closures worldwide due to the restrictions imposed by different governments, supply chain disruptions, low demand for goods, and logistic costs. Moreover, low oil prices on account of weak demand and excess supply also is also likely to get reflected in the sector’s performance.
Further, capital expenditures in oil & gas, mining and construction are likely to have been restrained. However, the sector players, which are engaged in packaging for food, medicines, home and personal-care products, are likely to have benefited from higher demand during the pandemic. Meanwhile, many of the sector participants have been focusing on extensive cost cutting and lean manufacturing actions in a bid to mitigate the impact of the coronavirus outbreak somewhat.
It will be interesting to see how some of the industrial companies fare when they release quarterly financial numbers on Apr 27.
Amcor Plc (AMCR - Free Report) is expected to report fiscal third-quarter 2020 results. The company has a trailing four-quarter positive earnings surprise of 7.9%, on average.
Increased demand for food, beverage, pharmaceutical, medical, home and personal-care, and other products in the times of the COVID-19 pandemic is likely to have benefited the company’s third-quarter performance. Further, synergy benefits from the ingoing integration of Bemis are also likely to get reflected on Amcor’s third-quarter results.
Amcor has a Zacks Rank of 1 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for earnings of 16 cents has remained unchanged in the past 60 days.
Packaging Corporation of America (PKG - Free Report) is scheduled to report first-quarter 2020 results after the closing bell. It has a trailing four-quarter positive earnings surprise of 0.52%, on average.
Packaging Corporation of America Price and EPS Surprise
The company’s packaging segment’s performance in the quarter to be reported is likely to have gained from elevated demand for meat, fruit and vegetables, processed food, beverages, medicine, and other consumer products owing to the coronavirus crisis. Meanwhile, lower paper consumption in schools, offices and businesses is likely to have dented the Paper segment’s first-quarter performance. Further, scheduled outages and higher costs are likely to get reflected on the company’s first-quarter results.
The company currently has a Zacks Rank of 3 and an Earnings ESP of 0.00%. The consensus mark for earnings has remained unchanged at $1.20 per share over the past 30 days. (Read more: What's in the Offing for Packaging Corp's Q1 Earnings?)
Lincoln Electric Holdings, Inc. (LECO - Free Report) is scheduled to report first-quarter 2020 results before the opening bell. It has a trailing four-quarter negative earnings surprise of 4.36%, on average.
Lincoln Electric Holdings, Inc. Price and EPS Surprise
The slowdown in industrial production and the impact of coronavirus outbreak such as lower order levels due to cautious customer spending, supply chain disruptions, impact of factory closures, are likely to get reflected in the to-be-reported quarter’s results.
The company currently has a Zacks Rank #4 (Sell) and an Earnings ESP of +3.16%. Over the past 60 days, the Zacks Consensus Estimate for its quarterly earnings has moved south by 4% to $1.00 per share.
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Industrial Stocks' Apr 27 Earnings Roster: AMCR, PKG, LECO
Per the latest Earnings Trends, total earnings for the Industrial Products Sector are anticipated to decline 20.8%, while revenues are projected to drop 5.4% as the coronavirus pandemic crippled supply chain globally, impacted manufacturing activity and weakened demand. However, the slump is not restricted to this sector alone, as 11 of the 16 Zacks sectors are expected to log declines this earnings season.
Key Factors to Consider
Per the Federal Reserve, industrial production contracted 7.5% in the first quarter of 2020 — the steepest since second-quarter 2009. Manufacturing output also slumped at an annual rate of 7.1% in the first quarter, the sharpest since first-quarter 2009. Meanwhile, per the Institute for Supply Management, the Manufacturing Purchasing Managers’ Index (PMI), after recording 50.9 in January, and 50.1 in February (indicating expansion), contracted again to 49.1% in March. These figures clearly indicate that the manufacturing sector has been impacted by the pandemic and energy market volatility in the January-March period.
Hence, the sector’s performance in the first quarter is likely reflect the challenges associated with COVID-19 outbreak, which include factory closures worldwide due to the restrictions imposed by different governments, supply chain disruptions, low demand for goods, and logistic costs. Moreover, low oil prices on account of weak demand and excess supply also is also likely to get reflected in the sector’s performance.
Further, capital expenditures in oil & gas, mining and construction are likely to have been restrained. However, the sector players, which are engaged in packaging for food, medicines, home and personal-care products, are likely to have benefited from higher demand during the pandemic. Meanwhile, many of the sector participants have been focusing on extensive cost cutting and lean manufacturing actions in a bid to mitigate the impact of the coronavirus outbreak somewhat.
It will be interesting to see how some of the industrial companies fare when they release quarterly financial numbers on Apr 27.
Amcor Plc (AMCR - Free Report) is expected to report fiscal third-quarter 2020 results. The company has a trailing four-quarter positive earnings surprise of 7.9%, on average.
Amcor PLC Price and EPS Surprise
Amcor PLC price-eps-surprise | Amcor PLC Quote
Increased demand for food, beverage, pharmaceutical, medical, home and personal-care, and other products in the times of the COVID-19 pandemic is likely to have benefited the company’s third-quarter performance. Further, synergy benefits from the ingoing integration of Bemis are also likely to get reflected on Amcor’s third-quarter results.
Per the Zacks quantitative model, 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amcor has a Zacks Rank of 1 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for earnings of 16 cents has remained unchanged in the past 60 days.
Packaging Corporation of America (PKG - Free Report) is scheduled to report first-quarter 2020 results after the closing bell. It has a trailing four-quarter positive earnings surprise of 0.52%, on average.
Packaging Corporation of America Price and EPS Surprise
Packaging Corporation of America price-eps-surprise | Packaging Corporation of America Quote
The company’s packaging segment’s performance in the quarter to be reported is likely to have gained from elevated demand for meat, fruit and vegetables, processed food, beverages, medicine, and other consumer products owing to the coronavirus crisis. Meanwhile, lower paper consumption in schools, offices and businesses is likely to have dented the Paper segment’s first-quarter performance. Further, scheduled outages and higher costs are likely to get reflected on the company’s first-quarter results.
The company currently has a Zacks Rank of 3 and an Earnings ESP of 0.00%. The consensus mark for earnings has remained unchanged at $1.20 per share over the past 30 days. (Read more: What's in the Offing for Packaging Corp's Q1 Earnings?)
Lincoln Electric Holdings, Inc. (LECO - Free Report) is scheduled to report first-quarter 2020 results before the opening bell. It has a trailing four-quarter negative earnings surprise of 4.36%, on average.
Lincoln Electric Holdings, Inc. Price and EPS Surprise
Lincoln Electric Holdings, Inc. price-eps-surprise | Lincoln Electric Holdings, Inc. Quote
The slowdown in industrial production and the impact of coronavirus outbreak such as lower order levels due to cautious customer spending, supply chain disruptions, impact of factory closures, are likely to get reflected in the to-be-reported quarter’s results.
The company currently has a Zacks Rank #4 (Sell) and an Earnings ESP of +3.16%. Over the past 60 days, the Zacks Consensus Estimate for its quarterly earnings has moved south by 4% to $1.00 per share.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>