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What's in Store for NCI Building (NCS) in Q1 Earnings?

Zacks Equity Research

NCI Building Systems Inc. NCS is set to report its first-quarter fiscal 2016 results on Mar 8. Last quarter, the company had posted a positive earnings surprise of 40.91%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

NCI Building expects first-quarter revenues to be up 10% to 15% on a year-over-year basis and gross margins between 22.5% and 24%. These estimates take into account the seasonal aspect of the business as it enters the slower part of the construction cycle and the typical disruptions faced during winter.

NCI Building anticipates choppy market conditions will persist in 2016, given the lukewarm growth in the current economic cycle. Nevertheless, the company remains committed to its strategic initiatives to optimize manufacturing footprint and decrease cost structure over the next several quarters.

Earnings Whispers

Our proven model does not conclusively show that NCI Building is likely to beat 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. That is not the case here, as you will see below:

Zacks ESP: NCI Building has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 2 cents.
 
Zacks Rank: NCI Building currently carries a Zacks Rank #2. Though a Zacks Rank #2 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

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

Stocks That Warrant a Look

Here are some stocks you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Acuity Brands, Inc. AYI, which has an earnings ESP of +5.26% and a Zacks Rank #2

Chicago Bridge & Iron Company N.V. CBI, which has an earnings ESP of +3.51% and a Zacks Rank #3

United Rentals, Inc. URI, which has an earnings ESP of +1.63% and a Zacks Rank #3

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NCI BLDG SYSTEM (NCS): Free Stock Analysis Report
 
UTD RENTALS INC (URI): Free Stock Analysis Report
 
ACUITY BRANDS (AYI): Free Stock Analysis Report
 
CHICAGO BRIDGE (CBI): Free Stock Analysis Report
 
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