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

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Pentair plc PNR is scheduled to report fourth-quarter 2020 results on Jan 28, before the opening bell.

Q3 Results & Surprise History

Pentair witnessed improvement in both revenues and earnings in third-quarter 2020, primarily attributable to ongoing strong demand in the residential focused businesses. The company beat the Zacks Consensus Estimate on both counts.

The company has an impressive earnings surprise history. Pentair has beat estimates in each of the trailing four quarters, the average surprise being 20.1%.

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

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter 2020 revenues is pegged at $751 million, indicating a decline of 0.5% from the year-ago quarter. The same for earnings stands at 63 cents, suggesting year-over-year drop of 7%. The Zacks Consensus Estimate for the fourth-quarter 2020’s earnings has remained stable over the past 30 days.

Key Factors to Note

Pentair continues to witness strong improvement in its Residential facing businesses.  Increased demand for swimming pools amid COVID-19 pandemic induced shelter-in-place restrictions continues to boost demand for Pentair’s equipment. Fourth-quarter results of the Consumer Solutions segment, which comprises pool and water solutions businesses, are likely to reflect solid pool demand and improvement in orders.

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

However, 25% of the Consumer Solutions segment’s revenues is tied to commercial business, which has exposure to restaurants and hospitality. Muted demand due to temporary shutdowns across hospitality and restaurant industries might have weighed on the segment’s fourth-quarter performance. Moreover, the shutdown in hospitality and commercial offices might have weighed on the Water Solutions business’ performance in the quarter to be reported.

Pentair’s Industrial & Flow Technologies segment’s fourth-quarter results are likely to reflect the impact of lower capital spending, and aftermarket sales orders by commercial and industrial customers. The backlog-driven Commercial & Infrastructure Flow business manufactures larger engineered pumps for fire suppression and flood control. This business has been affected by slowing orders on account of the coronavirus pandemic-related delays.

Pentair has been undergoing certain business-restructuring initiatives aimed at reducing fixed cost structure, which is likely to have aided margin growth during the fourth quarter. Notably, productivity improvement initiatives and the company’s efforts to reduce cost structure in the wake of the current demand environment are likely to have benefited margins in the quarter to be reported.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Pentair this time around. 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 is 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 -1.49%.

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

Price Performance

Shares of the company have gained 23.6% over the past year, compared with the industry’s rally of 41.8%.

Stocks Poised to Beat Earnings Estimates

Here are some 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:

AGCO Corporation AGCO has an Earnings ESP of +1.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV has an Earnings ESP of +5.55% and a Zacks Rank #2.

Sealed Air Corporation SEE has an Earnings ESP of +2.90% and a Zacks Rank of 2.

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