Industrial Stocks' Earnings to Watch on Apr 29: TYC, ETN
In first-quarter 2016, the economic conditions globally were no different from that of the 2015 quarters. Major developing and developed nations suffered from economic uncertainties. Also, soft commodity prices and forex woes kept the growth momentum restricted for many industries.
Worried over the weakening health of the global economy, the International Monetary Fund (“IMF”) lowered its world economic outlook to 3.2% for 2016 and 3.5% for 2017. Economic growth forecasts for advanced and emerging economies have been lowered by 20 basis points (bps) for 2016 and 10 bps for 2017.
Narrowing down to the U.S. markets, macro headwinds plagued the Jan-Mar quarter of few industries, including Industrial Products. In the quarter, the country’s industrial production fell 2.2% year over year. In addition, the export demand for U.S.-manufactured machinery suffered in the initial months of the quarter.
What the Statistics Reveal
Per our Earnings Trend report dated Apr 27th, roughly 209 companies or 41.8% of the S&P 500 companies reported their results for Jan-Mar quarter. Earnings have fallen roughly 5.5% while revenues have declined 1.6% compared with the year-ago quarter. Results for the Industrial Products sector were also weak. Earnings declined 27.2% year over year while revenue was down 10.3%.
With results unlikely to improve, earnings for the S&P 500 companies are projected to fall 8%, versus a 6.1% decline recorded in the previous quarter. Revenues are likely to edge down 2%, worse than the decline of 1% in fourth-quarter 2015.
Earnings for the Industrial Products sector are expected to decline 23.4% in the quarter; while revenues will likely fall 9.4%.
What’s in Store for Industrial Products Giants - TYC, ETN?
Below we discuss briefly the expectations from the upcoming results (Jan-Mar quarter) for two Industrial Products stocks:
Tyco International plc TYC: This industrial products giant is slated to release its second-quarter fiscal 2016 (ended Mar 2016) results on Apr 29, before the market opens. In the last four trailing quarters, the company outperformed expectations in three quarters, with an average beat of 4.45%.
Our proven model does not conclusively show that Tyco International is likely to beat earnings this quarter. This is because the company lacks the right combination of two key ingredients — a positive Earnings ESP (the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). The company currently carries a Zacks Rank #3 and 0.00% Earnings ESP. While the company anticipates benefiting from its portfolio repositioning activities, it is not immune to the risks arising from micro-and macro-headwinds. (For more please read: Will Tyco Q2 Earnings Surprise on Portfolio Reshuffle?)
Eaton Corporation plc ETN: This industrial products stock is slated to release its first-quarter 2016 results on Apr 29, before the market opens. The company’s performances in the last four trailing quarters were impressive, with an average beat of 3.04%.
Our proven model shows that Eaton Corp. is likely to beat earnings this quarter because it has the right combination of two key ingredients — Zacks Rank of #3 (Hold) and an Earnings ESP of +1.18%. The results will likely be primarily driven by the positive impacts of share buybacks and restructuring activities. (For more please read: Can Eaton Corp. Keep the Earnings Streak Alive in Q1?)
Don’t miss on our full earnings release articles for these two industrial products stocks, as the actual results might hold some surprises!
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TYCO INTL PLC (TYC): Free Stock Analysis Report
EATON CORP PLC (ETN): Free Stock Analysis Report
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