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Pentair (PNR) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Pentair plc PNR is slated to report fourth-quarter 2019 results on Jan 28, before market open. Notably, the company surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 2.92%.

A Sneak Peak into Q3 Results

Pentair delivered mixed third-quarter 2019 results, wherein earnings beat the Zacks Consensus Estimate, while sales missed the same. Both top- and bottom-line figures improved year over year.

Which Way are Estimates Treading?

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $752 million, indicating an improvement of 1.5% from the year-ago quarter. The same for earnings stands at 65 cents, suggesting growth of 8.3% year on year.

The Zacks Consensus Estimate for the fourth-quarter earnings remained unchanged over the past 30 days.

Price Performance

Shares of the company have gained 14.8% compared with the industry’s growth of 34.2%.

Will the upcoming earnings release provide a boost to Pentair’s stock? Let’s take a look.

Factors to Influence Q4 Results

Pentair has undergone certain business restructuring initiatives aimed at reducing fixed cost structure, which is likely to have boosted margin growth in the fourth quarter. However, inflation in material and other costs, which include the impact of tariffs, is likely to get reflected in the company’s performance 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 on its quarterly results.

A wet and cold weather delayed pool construction activity in several of Pentair’s key markets. As a result of slower sell-through, inventory levels have built up, which is likely to have impacted the Aquatic Systems segment’s performance during the period under consideration. However, the company is focused on stabilizing its inventory levels. Further, acquisitions during this period are also likely to have contributed to growth. The Zacks Consensus Estimate for the Aquatic Systems segment’s revenues is currently pegged at $268 million, suggesting a decline of 3.2% year over year. The segment’s operating profit for the quarter is projected to fall 2.5% year over year to $76 million.

The Zacks Consensus Estimate for the Filtration Solutions segment’s revenues is $272 million, which indicates year-on-year improvement of 10.1%. The consensus estimate for the segment’s operating profit is pinned at $47 million for the fourth quarter, suggesting growth of 6.8% from the $44 million reported in the prior year quarter.

The Zacks Consensus Estimate for the Flow Technologies segment’s revenues is pegged at $214 million for the quarter, representing 1.4% decline from the prior-year quarter. The segment is expected to report an operating income of $29.9 million in the quarter, which projects growth of 15.7% year on year. The segment manufactures and sells pumps used in agricultural irrigation and crop spray. Late planting due to unfavorable weather is likely to have depressed the sale of its agriculture-sprayer products. Consequently, weakness in the agricultural sector is likely to have eroded the segment’s revenues in the October-December period.

Pentair projects fourth-quarter 2019 adjusted earnings per share at 64-66 cents. The company had reported adjusted earnings per share of 60 cents in the fourth quarter of 2018.

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%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 65 cents.

Zacks Rank: Pentair currently carries a Zacks Rank of 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.

Lindsay Corporation LNN has an Earnings ESP of +8.07% and flaunts a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV carries a Zacks Rank #3 and has an Earnings ESP of +1.72%, at present.

Lincoln Electric Holdings, Inc. LECO is another Zacks Ranked #3 stock and has an Earnings ESP of +1.01%.

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