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Industrial Stocks' Earnings to Watch on Nov 1: BLL, SEE & PH

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Industrial Stocks' Earnings to Watch on Nov 1: BLL, SEE & PH

Industrial product stocks' earnings for the Jul-Sep period will be aided by the expanding manufacturing sector, rise in new orders despite tariff woes.

U.S. industrial production — one of the leading economic indicators for industrial stocks — grew at an annual rate of 3.3% in third-quarter 2018, despite uncertainty caused by prevalent global trade tensions over the past few months. In September, industrial production inched up 0.3%, supported by 0.2% growth in the manufacturing industry and 0.5% in mining, while the output of utilities remains unchanged. The encouraging economic data indicates improvement in the U.S. economy led by the expanding manufacturing sector, rise in new orders and a declining unemployment rate.

Further, per the Institute for Supply Management’s latest report, Purchasing Managers’ Index for September rose 59.8% — exhibiting strong growth in manufacturing for the 25th consecutive month. A reading above 50% indicates expansion in manufacturing activity.

Also, increasing business spending, stellar domestic demand and lower taxes seem to have buoyed the industrial products sector. However, concerns regarding tariffs, rising raw material prices and a strong U.S. dollar remain headwinds. The sector has also been adversely impacted by supply-chain disruptions stemming from the two back-to-back hurricanes, Florence and Michael.

Sector’s Performance so Far

For the Industrial Products  — one of the 16 Zacks sectors, earnings results released so far has been impressive. Per the latest Earnings Preview dated Oct 24, roughly 33.3% of industrial products stocks in the S&P 500 Group came up with results for this earnings season, recording a 25.2% rise in earnings and 7.3% growth in revenues on a year-over-year basis. The sector’s earnings are projected to be up 19.6% year over year in the third quarter on the back of 7.7% rise in revenues.

Some of the major industrial products companies have already posted their quarterly results. Among these, Caterpillar, Inc. CAT, the world's largest manufacturer of construction and mining equipment, delivered year-over-year improvement in the top and bottom lines in the third quarter, backed by continued strength in many of its end markets and incessant focus on cost control.

Let’s have a sneak peek at three industrial products stocks, scheduled to report their quarterly figures tomorrow, to see how things are shaping up for the upcoming results.

Ball Corporation BLL, which supplies metal packaging products, is slated to report third-quarter results before the opening bell. The company pulled off an average positive earnings surprise of 3.66% in the past four quarters. In the last reported quarter, it reported year-over-year improvement in both its top and bottom lines.

The Zacks Consensus Estimate for Ball Corporation’s earnings is currently pegged at 60 cents for the third quarter, which reflects an improvement of 15% on a year-over-year basis. Revenues for the quarter are pinned at $2.8 billion, indicating a 4.5% decline from the prior-year quarter.

Ball Corporation Price and EPS Surprise

 

Ball Corporation Price and EPS Surprise | Ball Corporation Quote

The company is likely to benefit from a favorable volume trend and a moderation of start-up costs in the third quarter. Nonetheless, Ball Corporation’s results will be hurt by continued decline in domestic beer consumption.

Our proven model does not conclusively show that Ball Corporation will beat earnings estimates in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Ball Corporation currently has a Zacks Rank #3 and an Earnings ESP of -1.01%. (Read more: Ball Corporation to Post Q3 Earnings: What Lies Ahead?)

Sealed Air Corporation SEE, the provider of food safety and security and product protection solutions, will report quarterly results before the market opens. In the last reported quarter, it recorded year-over-year improvement in both its top and bottom lines.

The company beat the Zacks Consensus Estimate in three of the preceding four quarters, delivering an average positive surprise of 3.52%.

The Zacks Consensus Estimate for Sealed Air’s third-quarter earnings is at 60 cents, projecting year-over-year increase of 30%. Revenues for the quarter pegged at $1.2 billion, indicating a 5% growth.

Sealed Air Corporation Price and EPS Surprise

 

Sealed Air Corporation Price and EPS Surprise | Sealed Air Corporation Quote

Sealed Air’s third-quarter earnings are anticipated to display benefits from the company’s focus on reducing cost structure. Nevertheless, currency headwinds, input cost inflation and increased investment in R&D, sales and marketing will somewhat dampen margins. (Read more: Sealed Air to Report Q3 Earnings: What's in the Cards?)

Sealed Air has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell), which makes surprise prediction inconclusive. As it is, we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Parker-Hannifin Corporation PH, which is a manufacturer of motion & control technologies and systems, will report first-quarter fiscal 2019 results before the market opens. The company reported year-over-year improvement in the top and bottom lines in fourth-quarter fiscal 2018.

It has outpaced the Zacks Consensus Estimate in all of the last four quarters, generating an average positive earnings surprise of 8.20%.

Parker-Hannifin Corporation Price and EPS Surprise

 

Parker-Hannifin Corporation Price and EPS Surprise | Parker-Hannifin Corporation Quote

The Zacks Consensus Estimate for Parker-Hannifin’s third-quarter earnings is $2.51, reflecting year-over-year growth of 12%. Revenues for the quarter are pegged at $3.5 billion, projecting a 5% year-over-year rise.

The company’s innovative Win Strategy will likely boost Parker-Hannifin’s revenues and profitability. However, unfavorable foreign-currency translation impact will weigh over its near-term top-line performances.

Parker-Hannifin has an Earnings ESP of -0.12%. The stock currently carries a Zacks Rank of #3. This combination makes it difficult to conclusively predict an earnings beat. (Read more: Parker-Hannifin to Post Q1 Earnings: What's in Store?)

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Ball Corporation (BLL) : Free Stock Analysis Report
 
Sealed Air Corporation (SEE) : Free Stock Analysis Report
 
Caterpillar Inc. (CAT) : Free Stock Analysis Report
 
Parker-Hannifin Corporation (PH) : Free Stock Analysis Report
 
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