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Pentair (PNR) to Report Q1 Earnings: What's in the Offing?

Zacks Equity Research

Pentair plc PNR is slated to report first-quarter 2019 results on Apr 17, before the opening bell.

In the last reported quarter, Pentair reported an increase of 15% and 3% in earnings and revenues, respectively. The company beat the Zacks Consensus Estimate on both counts. Notably, the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, recording average positive surprise of 3.62%.

Let’s see how things are shaping up prior to this announcement.

Pentair plc Price and EPS Surprise

 

Pentair plc Price and EPS Surprise

Pentair plc price-eps-surprise | Pentair plc Quote

Key Factors to Consider

Pentair recently issued preliminary results for first-quarter 2019. Adjusted earnings per share (EPS) came in at 43 cents in the to-be-reported quarter compared with 49 cents recorded in the prior-year quarter. Adjusted earnings fell short of the first-quarter guidance of 52-55 cents. The company’s performance has been impacted by adverse weather conditions in higher margin Aquatics and agricultural-related business in the to-be-reported quarter.

Further, sales during the quarter were down 6% year over year to $689 million, lower than the prior guidance of flat to up 1%. Excluding the impact of acquisitions, divestitures and currency translation, core sales were down 4% in the reported quarter. Pentair’s earlier guidance of core sales growth was at 4-5% year over year.

Considering the preliminary first-quarter results, Pentair has slashed earnings and sales guidance for the current year. The company now estimates adjusted EPS of $2.30-$2.35, down from the prior view of $2.50-$2.60. EPS, including special items, is expected in the range of $2.04-$2.09, significantly lower than the previous estimate of $2.29-$2.39.
Sales in 2019 will likely be up 1-2%, on a reported basis, down from the previously-guided range of 5-6%. On core basis, sales growth will be flat to up 1%, which is also well below the prior guidance of 4-5%.

The Zacks Consensus Estimate for earnings for the first quarter is at 48 cents. Meanwhile, estimates for revenues are pegged at $688.9 million.

On top of adverse impact from weather, the company witnessed moderating growth in several of its end markets. It is also experiencing higher-than-anticipated inventory levels in some of its key distribution channels. Nevertheless, Pentair has undergone certain business restructuring initiatives aimed at reducing fixed cost structure and commenced business realignment in the past. These actions will contribute to margin growth. Further, productivity improvement and price hikes implemented to combat higher input costs will aid results in the to-be-reported quarter.

Share Price Performance

Shares of the company have plummeted 43% in a year, compared with the industry’s decline of roughly 2%.

Here’s What Our Quantitative Model Predicts

Our proven model does not show that Pentair is likely to beat earnings estimates this 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Pentair’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -10.97%.

Zacks Rank: Pentair currently carries a Zacks Rank #3.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

Here are a few Industrial Products stocks which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Silgan Holdings Inc. SLGN has an Earnings ESP of +1.31% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore International Group Inc. ATKR has an Earnings ESP of +0.65% and a Zacks Rank #2.

Chart Industries, Inc. GTLS has an Earnings ESP of +7.48% and a Zacks Rank #2.

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