Will Emerson Electric (EMR) Earnings Surprise this Season?


Emerson Electric Co. (EMR) is set to report third-quarter 2014 results before markets open on Aug 5. Last quarter it posted a 2.4% negative surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered This Quarter

Despite several macroeconomic headwinds, Emerson’s business is expected to benefit from strategic acquisitions and increased growth opportunities in emerging markets. This apart, the company has been facing sluggish implementation of large projects in the global process industry. However, orders in the quarter are expected to remain steady driven by improved market conditions. Further, increasing volumes and favorable business mix are expected to drive the company’s margins. This momentum may be partially offset by expenses related to company’s increasing strategic investments.

Earnings Whispers?

Our proven model does not conclusively show that Emerson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. However, that is not the case here due to the following factors:

Negative Zacks ESP:  That is because the Most Accurate estimate stands at $1.04 while the Zacks Consensus Estimate is higher at $1.06. That is a difference of -1.9%.

Zacks Rank #3 (Hold): Emerson’s Zacks #3 Rank increases the predictive power of ESP. However, we caution investors against the stock going into the earnings announcement, as an ESP of -1.9% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.

Also, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement. 

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

The Andersons, Inc. (ANDE) with an Earnings ESP of +6.09% and Zacks Rank #2 (Buy).

United Rentals Inc. (URI) with an Earnings ESP of +2.38% and Zacks Rank #2.

Federal Signal Corp. (FSS) with an Earnings ESP of 4.76% and Zacks Rank #2.

Read the Full Research Report on EMR
Read the Full Research Report on ANDE
Read the Full Research Report on FSS
Read the Full Research Report on URI

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