U.S. Markets closed

Will CBI Miss on Earnings?

Zacks Equity Research

Chicago Bridge & Iron (CBI) is set to report third quarter 2013 results on Oct 31. Last quarter it posted results in line with the estimates. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

ChicagoBridgeis benefiting from the rising demand worldwide for energy infrastructure, especially in the LNG, gas processing and oil sands markets. Projects across the world have been a growth factor this year.

Chicago Bridge & Iron is very positive about increase in orders in the LNG division, especially for LNG/low temperature storage systems (petrochemicals), an area where CB&I plans to aggressively capture market share. However, unfavorable currency translation remains a drag.  

Earnings Whispers?

Our proven model does not conclusively show that Chicago Bridge 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. That is not the case here as you will see below.

Negative Zacks ESP:  That is because the Most Accurate estimate stands at $1.11 while the Zacks Consensus Estimate is higher at $1.12. That is a difference of -0.89%.

Zacks #3 Rank (Hold). ChicagoBridge’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

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:  

Universal Forest Products Inc. (SAFM), has Earnings ESP of 17.65% and Zacks  Rank #1 (Buy).

Boise Cascade Co. (BCC), has Earnings ESP of 5.56%and Zacks Rank #2 (Buy).

Rayonier Inc. (RYN), has Earnings ESP of 2.13% and Zacks Rank #2 (Buy).

Read the Full Research Report on CBI
Read the Full Research Report on BCC
Read the Full Research Report on RYN
Read the Full Research Report on SAFM

Zacks Investment Research