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4 Industrial Stocks Set to Beat Estimates This Earnings Season

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·6 min read
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The Zacks Industrial Products sector is anticipated to have performed well in the January to March quarter of 2021. The earnings season has so far witnessed releases from approximately 38.5% of industrial companies, with all of them beating earnings as well as revenue estimates.

Strong Outlook

Per the latest Earnings Preview report, overall earnings for the Industrial Products sector are anticipated to witness year-over-year increase of 29.3% on 8.8% higher revenues in the January-March quarter. Notably, the projections for the to-be-reported quarter indicate an improvement from 16.8% earnings growth on 1.8% increase in revenues witnessed in the previous quarter. The results of the industrial companies are likely to reflect the impacts of reopening of major economies, improved business operating conditions and the adverse impact of the pandemic.

Let us discuss the factors that might have played a key role in shaping the performance of industrial stocks.

Major Factors to Consider for Industrial Stocks

We believe that the operating environment for industrial companies was quite favorable in the January-March quarter, courtesy of higher manufacturing activities with more businesses operating at increased level, supported by growth in demand for industrial products and services. Per the latest Institute for Supply Management’s (“ISM”) report released on Apr 1, the Purchasing Managers Index (PMI) came in at 64.7% in March. Also, ISM’s measure of production in the same month was 68.1%, reflecting growth for the 10th consecutive month. In addition, new orders index was 68%, indicating the 10th consecutive month of increase. It’s worth noting here that in the to-be-reported quarter, the United States’ industrial production recorded an annual increase of 2.5%, with factory output rising 1.9%.

Growth in demand for products related to robotic cleaning and personal safety and health is likely to have been a tailwind for few companies. Further, the companies are likely to have benefited from focus on product innovation, cost-management actions and multiple promotional efforts. In addition, strong recovery in the e-commerce business might have aided the sector.

However, the lingering impact of the pandemic-led challenges is likely to have marred the quarter’s earnings. Also, forex woes, problems related to high debts and competitive pressures are expected to have adversely impacted in the quarter.

4 Stocks Poised for Earnings Beat This Season

Investors looking for options in the sector can select stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

The combination of a favorable ranking and positive ESP increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Below we have listed four industrial stocks, with the right combination of elements to post an earnings beat in the January-March quarter:

Zebra Technologies Corporation ZBRA: Based in Lincolnshire, IL, the company is engaged in offering enterprise asset intelligence solutions in the automatic identification and data capture solutions industry throughout the world. The company is likely to have benefited from its solid product offerings, focus on innovation, supply-chain optimization and a diversified business structure in the quarter.

The company presently carries a Zacks Rank #2 and has an Earnings ESP of +1.63%. The Zacks Consensus Estimate for the to-be-reported quarter has been raised 0.5% to $4.41 in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zebra Technologies will release its quarterly results on May 4, before market opens.

Zebra Technologies Corporation Price and EPS Surprise

Zebra Technologies Corporation Price and EPS Surprise
Zebra Technologies Corporation Price and EPS Surprise

Zebra Technologies Corporation price-eps-surprise | Zebra Technologies Corporation Quote

Emerson Electric Co. EMR: Based in St. Louis, MO, the company is a diversified global engineering and technology company, which offers a wide range of products and services to customers in consumer, commercial and industrial markets. It is expected to have gained from its robust backlog level as well as strength across its medical, life science, food and beverage, and residential end markets. However, weakness in a few automation end markets might have marred its performance.

The company presently carries a Zacks Rank #3 and has an Earnings ESP of +3.62%. The Zacks Consensus Estimate for quarterly earnings has been raised 1.1% to 90 cents in the past 60 days.

Emerson will release results on May 5, before market opens.

Emerson Electric Co. Price and EPS Surprise

Emerson Electric Co. Price and EPS Surprise
Emerson Electric Co. Price and EPS Surprise

Emerson Electric Co. price-eps-surprise | Emerson Electric Co. Quote

Enersys ENS: Headquartered in Pennsylvania, the company is engaged in manufacturing, marketing and distribution of various industrial batteries. It is likely to have benefited from solid demand for its NexSys products along with strength in defense, medical and space businesses. Weakness across the motive power business and pandemic-related challenges might have played spoilsport.

It currently has a Zacks Rank #3 and an Earnings ESP of +0.78%. The Zacks Consensus Estimate for fourth-quarter fiscal 2021 (ended March 2021) earnings has remained stable at $1.28 in the past 60 days.

Enersys is expected to release its results on Jun 7.

Enersys Price and EPS Surprise

Enersys Price and EPS Surprise
Enersys Price and EPS Surprise

Enersys price-eps-surprise | Enersys Quote

Regal Beloit Corporation RBC: The company is a leading manufacturer of electrical and
mechanical motion control products. The company is expected to have gained from strength in its pool pump, data center, North America residential HVAC and commercial refrigeration end markets. Also, its business-restructuring initiatives, reorganization actions, cost-saving measures and supply-chain efforts might have been beneficial. However, weakness across general industrial and alternative energy end markets might have affected its top line in the quarter.

It currently has a Zacks Rank #3 and an Earnings ESP of +2.38%. The Zacks Consensus Estimate for quarterly earnings has been raised 0.6% to $1.68 in the past 60 days.

Regal Beloit is expected to release results on May 3, after market close.

Regal Beloit Corporation Price and EPS Surprise

Regal Beloit Corporation Price and EPS Surprise
Regal Beloit Corporation Price and EPS Surprise

Regal Beloit Corporation price-eps-surprise | Regal Beloit Corporation Quote

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

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.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Emerson Electric Co. (EMR) : Free Stock Analysis Report

Regal Beloit Corporation (RBC) : Free Stock Analysis Report

Enersys (ENS) : Free Stock Analysis Report

Zebra Technologies Corporation (ZBRA) : Free Stock Analysis Report

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