First-quarter 2020 earnings for the Industrial Products sector are expected to decline 20.8%, while revenues and margins are projected to drop 5.3% and 1.8%, respectively, on a year-over-year basis. Notably, weakness in global industrial production along with the impact of the coronavirus outbreak is likely to have affected the sector’s performance. The decline is outstretched to other sectors as well, with 11 of the 16 Zacks sectors anticipated to record declines this earnings season.
Key Factors for Industrial Stocks
Per the latest report published by the Federal Reserve on Apr 15, the U.S. industrial production declined 0.5% and 5.4% (on a month-over-month basis) in January and March, respectively, while it inched up 0.5% in February. Further, manufacturing output declined at an annual rate of 7.1% in the first quarter. Also, per the latest Manufacturing ISM Report, the Purchasing Managers’ Index contracted to 49.1% in March after recording 50.9% in January and 50.1% in February (reflecting expansion). The metrics suggest that the pandemic and energy market volatility have adversely impacted the sector in the first quarter.
Notably, factory closures across the country, supply-chain disruptions, low demand for goods and services, and the impacts of the restrictions imposed by the government, among others, are likely to have affected the Industrial Products sector. Moreover, the uncertain demand environment created by the trade tariffs is likely to have hurt the profits of manufacturing companies in the quarter.
In addition, high costs and operating expenses, huge debt levels, and unfavorable movements in foreign currencies are likely to get reflected in the results of the industrial companies in the first quarter.
However, several companies in the sector, which are engaged in packaging for medicines and producing materials for personal protective equipment, are anticipated to have benefited from the surge in demand. Also, the sector’s participants’ several cost-control measures, including the reduction of discretionary expenses, eliminating unnecessary investments and re-prioritization of its capital expenditure, are expected to have helped mitigate the adverse impact of the pandemic.
It will be interesting to see how some of the industrial companies fare when they release quarterly financial numbers on Apr 30.
Parker-Hannifin Corporation PH will release third-quarter fiscal 2020 (ended Mar 31, 2020) results before market open. It delivered better-than-expected results in each of the last four quarters. Earnings surprise for the period was a positive 6.98%, on average.
Our proven model provides some idea about stocks that are about to release earnings results. Per the model, a stock needs a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Currently, the company has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.83%. It might have suffered from high costs and debt level as well as forex woes. However, strength in end markets like marine, lawn and turf as well as recovery in mining and semiconductor end-markets might have aided.
Parker-Hannifin Corporation Price and EPS Surprise
Parker-Hannifin Corporation price-eps-surprise | Parker-Hannifin Corporation Quote
The Zacks Consensus Estimate for the company’s quarterly earnings has been decreased by 7% to $2.26 per share in the past 60 days.
Stanley Black & Decker, Inc. SWK is expected to release first-quarter 2020 results before market open. In each of the past four quarters, the company recorded better-than-expected results. Earnings surprise for the period was a positive 9.95%, on average.
Presently, the company has a Zacks Rank #4 and an Earnings ESP of -11.01%. The coronavirus outbreak, adverse impacts of tariffs, and woes related to plant absorption and product mix in the Tools & Storage segment are expected to have affected its performance during the quarter.
Stanley Black & Decker, Inc. Price and EPS Surprise
Stanley Black & Decker, Inc. price-eps-surprise | Stanley Black & Decker, Inc. Quote
Over the past 60 days, the Zacks Consensus Estimate for its quarterly earnings has been lowered by 11% to $1.13 per share.
Pentair plc PNR will report results for the first quarter, before market open. It recorded better-than-expected results in three of the last four quarters, while met estimates once. Earnings surprise for the period was a positive 3.66%, on average.
Presently, the company has a Zacks Rank #4 and an Earnings ESP of -4.20%. Its performance is expected to have been affected by the coronavirus outbreak, material cost inflation, the impacts of inventory build-up, and fluctuations in foreign currency exchange rates.
Pentair plc Price and EPS Surprise
Pentair plc price-eps-surprise | Pentair plc Quote
Over the past 60 days, the Zacks Consensus Estimate for first-quarter earnings has decreased 12% to 44 cents per share.
Applied Industrial Technologies, Inc. AIT is expected to release third-quarter fiscal 2020 (ended Mar 31, 2020) results before market open. In the past four quarters, the company recorded better-than-expected results only once. Earnings surprise for the period was a negative 3.54%, on average.
Presently, the company has a Zacks Rank #4 and an Earnings ESP of 0.00%. Low demand, high interest expenses and woes related to international operations are likely to have affected the company’s performance during the quarter.
Applied Industrial Technologies, Inc. Price and EPS Surprise
Applied Industrial Technologies, Inc. price-eps-surprise | Applied Industrial Technologies, Inc. Quote
Over the past 60 days, the Zacks Consensus Estimate for its quarterly earnings has been lowered by 10% to $1.00 per share.
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