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Pentair (PNR) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research

Pentair plc PNR is expected to report second-quarter 2020 results on Jul 23, before market open. The company surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 8.20%.

A Sneak Peek into Q1 Results

Pentair delivered better-than-expected first-quarter 2020 results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate and improved year over year.

Which Way are Estimates Treading?

The Zacks Consensus Estimate for second-quarter revenues is pegged at $678 million, indicating a decline of 15.2% from the year-ago quarter. The same for earnings stands at 48 cents, suggesting a plunge of 30.4% year on year.

The Zacks Consensus Estimate for the June-end quarter’s earnings have been unrevised over the past 30 days.

Let’s see how things have shaped up prior to this announcement.

Key Factors

The company suspended operations in many of its major facilities due to lower production in the wake of the coronavirus outbreak. Consequently, Pentair withdrew the financial guidance for the June-end quarter as well as for the current year. Its production was interrupted by the stay-at-home orders, as a result of which, the company was compelled to reduce operations in several facilities. These factors are likely to have unfavorably impacted the quarterly performance.

Pentair has undergone certain business-restructuring initiatives aimed at reducing fixed cost structure, which is likely to have aided margin growth during the second quarter. However, inflation in material and other costs, which include the impact of tariffs, is likely to get reflected in the company’s results, and consequently the bottom line for the quarter. Notably, productivity improvement and price hikes to combat higher input costs are likely to have negated the impact of elevated raw-material costs. Moreover, Pentair is implementing actions to reduce its cost structure in the wake of the current demand environment and economic uncertainty.

The company’s efforts to expand in the areas of pool as well as residential and commercial water treatment through acquisitions, introduction of water-treatment solutions, investments and innovations are anticipated to have contributed to the Consumer Solutions segment’s growth.

However, lower industry sales might have eroded the Industrial & Flow Technologies segment’s revenues during the April-June period, given the segment’s sales being mostly tied to various industrial markets. Further, the current weakness in the agricultural sector might have impacted the segment’s residential and irrigation flow business during the quarter under review.

Pentair plc Price and EPS Surprise

Pentair plc Price and EPS Surprise
Pentair plc Price and EPS Surprise

Pentair plc price-eps-surprise | Pentair plc Quote

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Pentair this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Pentair is 0.00%.
Zacks Rank: Pentair currently carries a Zacks Rank of 3.

Price Performance

Shares of the company have gained 37.5% over the past three months, outperforming the industry’s growth of 34.3%.

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.

Allegion plc ALLE has an Earnings ESP of +2.27% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln Electric Holdings, Inc. LECO currently carries a Zacks Rank #2 and has an Earnings ESP of +5.50%.

W.W. Grainger, Inc. GWW, a Zacks #3 Ranked stock, has an Earnings ESP of +13.76%.

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