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Will Q4 Earnings Hold a Surprise for Pentair (PNR) Stock?

Zacks Equity Research

Pentair plc PNR is expected to report fourth-quarter 2016 results on Jan 31. Last quarter, the company posted a positive earnings surprise of 6.85%. Pentair has beaten estimates in each of the trailing four quarters, with an average positive earnings surprise of 5.49%. Let’s see how things are shaping up for this announcement.

Key Factors in the Quarter

For the fourth quarter, Pentair expects EPS at around 73 cents, highlighting a decline of approximately 17% year over year on an adjusted basis. Revenues are projected at roughly $1.22 billion, down both 6% on a reported basis as well as core basis compared to fourth-quarter 2015 revenues. The guidance reflects the ongoing sluggish industrial environment.

Pentair expects Water Quality Systems sales to grow approximately 2% while Flow & Filtration Solutions is likely to decline 9% primarily related to lower project spending in the food and beverage space during the quarter.

Pentair PLC. Price and Consensus

 

Pentair PLC. Price and Consensus | Pentair PLC. Quote

Further, Technical Solutions revenues are expected to decline approximately 10% primarily due to the completion of the previously mentioned large Canadian projects and mid-teens declines in year-over-year MRO spending within energy. Pentair thus projects approximately 10% decline in the segment’s income in the fourth quarter.

Share Price Performance

In the last one year, Pentair has underperformed the Zacks classified Machinery-Thermal Products sub-industry with respect to price performance. The stock gained 38.2%, while the industry rose 46.1% over the same time frame.

 


 

Earnings Whispers

Our proven model does not conclusively show that Pentair is likely to beat earnings this quarter as it lacks the key components. 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. This is not the case here as you will see below:

Zacks ESP: The Earnings ESP for Pentair is 0.00%. This is because the Most Accurate estimate of 73 cents is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pentair currently carries Zacks Rank #3. Although this increases the predictive power of ESP, the company’s 0.00% ESP makes an earnings prediction uncertain.

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

Stocks to Consider

Methanex Corporation MEOH has a positive Earnings ESP of +53.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa Corporation AA has an Earnings ESP of +4.55% and a Zacks Rank #3.

AGCO Corporation AGCO has an Earnings ESP of +5.63% and a Zacks Rank #3.

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Methanex Corporation (MEOH): Free Stock Analysis Report
 
AGCO Corporation (AGCO): Free Stock Analysis Report
 
Alcoa Corp. (AA): Free Stock Analysis Report
 
Pentair PLC. (PNR): Free Stock Analysis Report
 
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